Monthly Archives: December 2017

Optimal quantitative easing

Richard Harrison

Ben Bernanke famously remarked that “the trouble with QE is that it works in practice but not in theory”.  And ahead of its adoption, many academics were sceptical that QE would have any effects at all.  Yet despite QE being a part of the monetary policy landscape for nearly a decade, the bulk of academic research on QE has been on its empirical effect, with relatively little on theory and less still on normative policy questions. In a recent Staff Working Paper I develop a model which can provide answers to questions such as: “How should monetary policymakers return their instruments to more normal levels?” and “Should QE be part of the regular monetary policy toolkit?”

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Filed under Macroeconomics, Monetary Policy