An Analysis of the Literature on International Unconventional Monetary Policy
93 Pages Posted: 4 Nov 2016 Last revised: 21 Feb 2019
Date Written: November, 2016
This paper evaluates the literature on international unconventional monetary policies (UMP). Introducing market segmentation, limits-to-arbitrage, and time-consistent policy in standard models permits a theoretical role for UMP. Empirical studies provide compelling evidence that UMP influenced international asset prices and tail-risk in the desired manner. Calibrated modeling and vector autoregressive (VAR) exercises imply that these policies also improved macroeconomic outcomes. We assess the recent debate on the empirical evidence and discuss central bank assessments of UMP. Despite qualified successes, we recommend that UMP be reserved for crises and/or when the zero bound constrains conventional monetary policy.
JEL Classification: E51, E58, E61, F31, G12
Suggested Citation: Suggested Citation