Assessing Potential Inflation Consequences of QE after Financial Crises

25 Pages Posted: 27 Nov 2012

Date Written: November 26, 2012


Financial crises have been followed by different inflation paths which are related to monetary policy and money creation by the banking sector during those crises. Accounting for equilibrium changes and non-linearity issues, the empirical relationship between money and subsequent inflation developments has remained stable and similar in crisis and normal times. This analysis can explain why the financial crisis in Argentina in the early 2000s was followed by increasing inflation, whereas Japan experienced deflation in the 1990s and 2000s despite quantitative easing. Current quantitative easing policies should lead to increasing and persistent inflation over the next years.

Keywords: Financial crises, inflation, monetary aggregates, quantitative easing

JEL Classification: E52, E58, E41

Suggested Citation

Reynard, Samuel, Assessing Potential Inflation Consequences of QE after Financial Crises (November 26, 2012). Peterson Institute for International Economics Working Paper No. 12-22, Available at SSRN: or

Samuel Reynard (Contact Author)

Swiss National Bank ( email )

Boersenstrasse 15
Zurich, 8022

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