Quantitative Easing

This paper is an attempt to conduct an analysis of the origins and the primary outcomes of ‘Quantitative Easing’ that European Central Bank has been implementing since March 2015.
The aim of the paper is to show the effectiveness of Quantitative Easing and the responsiveness of the Eurozone to obtain the expected results. Although the general idea is that QE effectively sustained economic recovery from the 2012 Global Financial Crisis, some critiques have been enhanced by academics: all these important evaluations would be taken into account in the completion of this work.
The analysis will be conducted through the usage of updated statistics regarding the main macroeconomic indicators which might assess either the results either the prospects or the consequences which Eurozone would face after QE’s ending in the short-run.

Interest rates in several countries have recently been decreased to exceptionally low levels and a Quantitative Easing Monetary Policy (QEMP) has been adopted by most major central banks. In this context this paper is very actual, as it sheds some light on the effectiveness of the Japanese use of QEMP, which is the only experience we can learn from. This paper employs a Time Varying Parameters Factor-Augmented VAR (TVP-FAVAR) model to analyse monetary policy shocks in Japan. This model allows us to explore the effect of QEMP on a large number of variables. Our analysis delivers four main results. First, unsurprisingly, our results suggest that the best model to specify the Japanese monetary policy during the two last decades is a model where all of parameters vary over time. Second, the effect of QEMP on activity and prices is stronger than previously found. In particular, we find a significant price reaction to a monetary policy shock. Third, in contrast to previous work, there is a detectable efficiency of the portfolio-rebalancing channel, which could have a role in transmitting the monetary policy shocks. Fourth, while the policy commitment succeeds in controlling private and business expectations, these effects are not transmitted to the long-end of the yield curve.

Instead, it will cause major damage throughout the world economy, especially in emerging markets, where the U.S. dollar remains a leading reserve and transaction currency. If this decision is not corrected soon, the Fed's policy may cause another macroeconomic and financial crisis in the very near future.

The paper examines the investment activities of Swiss National Bank during last years and especially what is the nature of these activities, what is their scope, what are their financial grounds, what possible consequences could they lead to, and why are they so disconcerting for the financial world. The study finds that the Swiss National Bank operates as a quasi-government hedge fund following the global macro investment strategy. In fact the SNB is increasing the Swiss francs in circulation in order to make investments in foreign debt instrument and stocks. The study states that such kind of interventions from the leading central banks in the world in the pricing mechanism of global financial markets can reduce the scope of operations of portfolio managers and turn investing into a constant game of guesswork and tracking the behaviour of certain central banks or juggling with investment assets which actual value is unknown and immeasurable and more impornant - to lead to investment bubbles, financial and economic crises.

Changes made as a result of publishing processes such as copy-editing, formatting and page numbers may not be reflected in this version. For the definitive version of this publication, please refer to the published source. You are advised to consult the publisher's version if you wish to cite this paper.

Le misure non convenzionali di espansione monetaria e, in particolare, il quantitative easing hanno consentito ai paesi che le hanno adottate di attutire le conseguenze della crisi. Tanto i loro benefici quanto i loro costi si sono distribuiti in modo ineguale sia all'interno di quei paesi, sia rispetto alle altre economie, con particolare riguardo a quelle emergenti. La liquidità immessa nel sistema rappresenta una minaccia per la stabilità finanziaria futura e determina un aumento della pressione dei paesi emergenti per il superamento del sistema monetario attuale.

Canada’s housing crisis is far more severe than most people realize. The fundamental problem is an excess of money pouring into the housing market from various sources, combined with an abdication of responsibility by all levels of government for the past 30 years.

There are many on-the-ground solutions, demonstrating positive ways to build affordable housing. And there are seven new housing-related taxes that could raise the funds needed for a massive expansion of affordable housing.

The fundamental cause of the problem is the excess of funds flowing into the market, and until this is solved house prices will continue to rise, and most other solutions will seem like never-ending sandbagging.

The money supply problem can be solved. The money can be obtained to restore safe, sustainable, socially designed affordable housing as a fundamental human right.

And by establishing an Affordable Housing Social Justice Connector, a permanent, hundred-year solution can be put in place that will guarantee that Canada need never confront a housing crisis again.

This essay will consist of two major parts. Firstly, various roles and functions of central banks will be presented, with particular focus on the recent years. Secondly, complexities of the central banking functions and monetary policy will be analysed, considering the extent to which Artificial Intelligence is (un)prepared to perform them autonomously in the foreseeable future (up to 2030).

We analyse the impact of standard and non-standard monetary policy on bank profitability. We use both proprietary and commercial data on individual euro area bank balance-sheets and market prices. Our results show that a monetary policy easing – a decrease in short-term interest rates and/or a flattening of the yield curve – is not associated with lower bank profits once we control for the endogeneity of the policy measures to expected macroeconomic and financial conditions. Accommodative monetary conditions asymmetrically affect the main components of bank profitability, with a positive impact on loan loss provisions and non-interest income offsetting the negative one on net interest income. A protracted period of low monetary rates has a negative effect on profits that, however, only materializes after a long time period and is counterbalanced by improved macroeconomic conditions. Monetary policy easing surprises during the low interest rate period improve bank stock prices and CDS.
This is an author original version (AOV). The version of record [Monetary Policy and Bank Profitability in a Low Interest Rate Environment’, Carlo Altavilla, Miguel Boucinha and José-Luis Peydró, Economic Policy, October 2018, 33(96), 531-586] is available online at https://academic.oup.com/economicpolicy/article/33/96/531/5124289; DOI: https://doi.org/10.1093/epolic/eiy013

Complete document available on OLIS in its original format This document and any map included herein are without prejudice to the status of or sovereignty over any territory, to the delimitation of international frontiers and boundaries and to the name of any territory, city or area. ECO/WKP(2013)74 Unclassified English -Or. English ECO/WKP(2013)74 2 ABSTRACT/RÉSUMÉ

Pubblicato in: http://contropiano.org/news/news-economia/2019/02/05/fine-di-unepoca-0112098

Traduzione di http://www.academia.edu/38254868/Vladimiro_Giacché_Ende_einer_Epoche_junge_Welt_Beilage_XXIV._Internationale_Rosa-Luxemburg-Konferenz_vom_30.01.2019_S._4-5

La traduzione è di Francesco Spataro

(file scaricabile anche da: http://www.marx21.it/index.php/internazionale/economia/29543-fine-di-unepoca )

On September 13, 2012, at the Federal Open Market Committee (FOMC)
meeting, the US Federal Reserve announced another round of quantitative
easing called QE3 by purchasing additional agency mortgage-backed securities (MBS) at a pace of USD 40 bn per month. Almost four years has passed since the release of the first round of quantitative easing (QE1) also second round of quantitative easing (QE2) and yet, US economy remains weak. Will QE3 make economy more resilient?

Quantitative Easing (QE) became common in developed nations following the financial crisis. However long term outcomes of such policy are not extensively explored and could, according to literature, be creating benign, low volatility markets that lead to financial crisis. I use financial time series data -­‐ the FTSE100 and S&P500 -­‐ to model the impact of QE on the volatility of these markets.

This article argues that the PSPP judgment by the Bundesverfassungsgericht (BVerfG) effectively buries the era of financial liberalism, which has dominated the European economic constitution for decades. It raises the curtain on a new political paradigm , which I call "integrative liberalism". Whereas the financial crisis put financial liberalism under strain, the development since then has been contradictory, torn between state intervention and market liberalism, focused above all on buying time rather than finding a new constitutional equilibrium. Now, together with the measures adopted in response to COVID-19, the PSPP judgment paves the way for profound change. Integrative liberalism is characterized by an overall shift from the market to the state, mitigating the post-crisis insistence on austerity and conditionality. Contrary to the embedded liberalism of the postwar era, integrative liberalism operates in a corrective and reactive mode with a focus on goals and principles, lacking the emphasis on long-term planning. Like every political paradigm, integrative liberalism ushers in a new understanding of the law. It puts the emphasis on context instead of discipline, and it elevates the proportionality principle. If integrative liberalism is to succeed, however, the democratic legitimacy of the Eurosystem and its independence require serious reconsideration.

Detailed analysis of the Corporate Sector Purchase Programme (CSPP) of the European Central Bank (ECB) reveals a deep misalignment between ECBs policy interventions and European Union's climate policy objectives. Whereas EU climate policies try actively to transform the European economy to make it more sustainable, the CSPP merely reproduces the current state of the corporate bond market. The ECB therefore mirrors investment choices made by financial markets, even though financial markets seem misaligned with a mitigation path limiting the global warming to 1,5°. The weight of the most carbon intensive sectors within the CSPP portfolio is in line with the market neutrality principle claimed by the ECB, yet is profoundly troubling from the point of view of the ecological transition, as it maintains low capital costs and easy debt issuance conditions for the most polluting companies, without any assurance that these financial conditions serve the purpose of adjusting the underlying business and industrial models. This policy note suggests a way to integrate carbon emissions as a criterion in its own right, shaping central banks' investment decisions and the collateral framework used for refinancing purposes.

In times of crisis it is essential that some form of stabilization mechanism be put in place to check the abnormal trends in the economy. Governments and Central bank often result to different regimes of macroeconomic stabilization to stabilize and re-energize the economy. This study reviews Minsky's Financial Market Instability Hypothesis and re-evaluates the recommendations in the work of Minsky necessary for the stabilization of the economy. It is expected to provide further insight on the relevance of current recommendations in the macroeconomic stabilization process and restart the open ended argument of the process of responding to crisis in the future.

Monetary policy for those Members whose currency is the Euro is one of European Union's few formally exclusive competences. Yet despite formal allocation of monetary policy competence to the Union, this chapter argues that the practice of monetary policy decision-making reflects the EU's nation-state structure. It tells us one side of the story about the balance of power for the conduct of monetary policy. If exclusive competence at bottom means that member states have no say in devising policy, then monetary policy, is not at present a genuinely exclusive competence.
Instead, the chapter contends that monetary policy is an exclusive competence of the EU in name only. At the very least, the position is more nuanced than the label of exclusive competence suggests.
The first section compares competence for monetary policy with related areas, specifically economic policy, and closely connected thereto, education, health, labour and social policy. It also briefly discussed how the Eurozone crisis has affected the vertical balance of responsibilities between the EU and its member states in these areas. The second section examines the asymmetric allocation of competence for economic and monetary policy, and the fuzzy boundary between the two, through the prism of the two key Eurozone crisis cases before the CJEU, Pringle and Gauweiler. The third section examines why, contrary to first appearances, the EU does not at present have a genuine exclusive competence for monetary policy.

Der italienische Ökonom Vladimiro Giacché, dessen Buch „Anschluss“ über die deutsche Wiedervereinigung auch ins Deutsche übersetzt wurde, plädiert für eine Abschaffung des Euro.

https://deutsche-wirtschafts-nachrichten.de/2018/01/21/oekonom-die-gruendung-des-euro-war-ein-schwerwiegender-fehler/

This paper examines quantity-targeting monetary policy in a two-period economy with fiat money, endogenously incomplete markets of financial securities, durable goods and production. Short positions in financial assets and long-term loans are backed by collateral, the value of which depends on monetary policy. The decision to default is endogenous and depends on the relative value of the collateral to the loan. We show that Collateral Monetary Equilibria exist and prove there is also a refinement of the Quantity Theory of Money that turns out to be compatible with the long-run non-neutrality of money. Moreover, only three scenarios are compatible with the equilibrium condition: 1) either the economy enters a liquidity trap in the first period; 2) or a credible expansionary monetary policy accompanies the orderly functioning of markets at the cost of running an inflationary risk; 3) else the money injected by the Central Bank increases the leverage of indebted investors, fueling a financial bubble whose bursting leads to debt-deflation in the next period with a non-zero probability. This dilemma of monetary policy highlights the default channel affecting trades and production, and provides a rigorous foundation to Fisher's debt deflation theory as being distinct from Keynes' liquidity trap.

CNMT (Classical Neoclassical Monetary Theory) has defined monetary policy and the role of Central Banks for the last one hundred years. This book argues that it is time to change. It proposes a NMT (New Monetary Theory) which argues that Central Banks should be responsible for the whole relation between money and economic growth. For monetary policy it means that in regular times Central Banks will continue being guided by CNMT and QE (Quantitative Easing) should not be used. But in major crises like 1930, 2008, and 2020, NMT should be the guide and QE should be used extensively. NMT proposes that Central Banks should become even more independent and responsible for the productive economy, while traditional governments remain responsible mainly for the social economy. NMT argues that in major crises fiscal policy should only be limited to support the social economy - that one which does not have survival productive characteristics. And that extended QE, which we call in here the Monetary Credit Bazooka (MCB), should be used to support the productive economy - the one capable to receive and repay long term preferential loans. NMT implies a major revolution both in Monetary Theory and in Monetary Policy, but it is required both to have fast and efficient responses in major economic crises, and to avoid the inefficiencies associated with government spending and the unnecessary long term burdens to the tax payers which always imply unjust economic transfers.

1. La decisione della Corte costituzionale tedesca sul programma di acquisto di titoli del debito pubblico PSPP irrompe rumorosamente nel dibattito pubblico europeo sui poteri della Banca centrale e mentre assolve, in sostanza, il Quantitative easing draghiano, sia pure imponendo all'istituto di Francoforte una lieve penitenza, preannuncia invece una condanna senza appello delle misure di sostegno finalizzate a reagire alla crisi economica causata dal Covid-19.

This paper estimates the impact of the Federal Reserve's 2008-2011 quantitative easing (QE) program on the U.S. term structure of interest rates. Di¤erent from other studies, we estimate an arbitrage-free term structure model that explicitly includes the quantity impact of the Fed's trades on Treasury market prices. As such, we are able to estimate both the magnitude and duration of the QE price e¤ects. We show that the Fed's QE program a¤ected forward rates without introducing arbitrage opportunities into the Treasury security markets. Short-to medium-term forward rates were reduced (less than twelve years), but the QE had little if any impact on long-term forward rates. This is in contrast to the Fed's stated intentions for the QE program. The duration of the rate impacts increased with maturity up to 7 years then declined, with half-lives lasting approximately 4, 5, 19, 11 and 6 months for the 1, 2, 5, 10 and 12 year forwards, respectively. Since bond yields are averages of forward rates over a bond's maturity, QE a¤ected long-term bond yields. The average impacts on bond yields were 372, 32, 55, 73, and 79 basis points for 1, 2, 5, 10 and 30 years, respectively. These yield impacts are consistent with those estimated in the existing literature, except for the 1-year rate. Our 1-year yield change is signi…cantly greater than that in the existing literature.

Monetary policy for those Members whose currency is the Euro is one of European Union’s few formally exclusive competences. Yet despite formal allocation of monetary policy competence to the Union, this chapter argues that the practice of monetary policy decision-making reflects the EU’s nation-state structure. It tells us one side of the story about the balance of power for the conduct of monetary policy. If exclusive competence at bottom means that member states have no say in devising policy, then monetary policy, is not at present a genuinely exclusive competence. Instead, the chapter contends that monetary policy is an exclusive competence of the EU in name only. At the very least, the position is more nuanced than the label of exclusive competence suggests.

The first section compares competence for monetary policy with related areas, specifically economic policy, and closely connected thereto, education, health, labour and social policy. It also briefly discussed how the Eurozone crisis has affected the vertical balance of responsibilities between the EU and its member states in these areas. The second section examines the asymmetric allocation of competence for economic and monetary policy, and the fuzzy boundary between the two, through the prism of the two key Eurozone crisis cases before the CJEU, Pringle and Gauweiler. The third section examines why, contrary to first appearances, the EU does not at present have a genuine exclusive competence for monetary policy.

While many analyses of monetary policy consider only a target for a short-term nominal interest rate, other dimensions of policy have recently been of greater importance: changes in the supply of bank reserves, changes in the assets acquired by central banks, and changes in the interest rate paid on reserves. We extend a standard New Keynesian model to allow a role for the central bank's balance sheet in equilibrium determination, and consider the connections between these alternative dimensions of policy and traditional interest-rate policy. We distinguish between "quantitative easing" in the strict sense and targeted asset purchases by a central bank, and argue that while the former is likely be ineffective at all times, the latter dimension of policy can be effective when financial markets are sufficiently disrupted. Neither is a perfect substitute for conventional interest-rate policy, but purchases of illiquid assets are particularly likely to improve welfare when the zero lower bound on the policy rate is reached. We also consider optimal policy with regard to the payment of interest on reserves; in our model, this requires that the interest rate on reserves be kept near the target for the policy rate at all times.

Adita ancora una volta dal Tribunale costituzionale federale tedesco ai sensi dell’art. 267 TFUE, la Corte di giustizia ha confermato la piena validità del Programma di acquisto di attività del settore pubblico sui mercati secondari (PSPP), valorizzando il ruolo di sostegno alle politiche economiche generali dell’Unione attribuito al SEBC dai Trattati istitutivi.

Seized once again by the German Constitutional Court according to art. 267 TFEU, the EU Court of Justice, in line with Pringle and Gauweiler judgments, confirmed the validity of the Public sector asset purchase programme on secondary markets (PSPP) implemented by the Governing Council of the ECB starting from March 2015, enhancing the role of the ESCB in supporting the general economic policies in the Union, as provided for in the Treaties.

1747 applicants brought four constitutional complaints before the German Constitutional Court, which the Court consolidated for joint adjudication. They challenged the constitutionality of the European Central Bank’s Public Sector Purchase Programme (‘PSPP’), particularly the inaction of the German Federal Government, the Bundestag (German Parliament) and the Bundesbank (German Central Bank) concerning the PSPP. The European Central Bank (‘ECB’) launched the PSPP on 22 January 2015. This case note discusses the Court's judgment.

This paper discusses recent UK monetary policies as instances of John Kenneth Galbraith's "innocent fraud," including the idea that money is a thing rather than a relationship, the fallacy of composition (i.e., that what is possible for one bank is possible for all banks), and the belief that the money supply can be controlled by reserves management. The origins of the idea of quantitative easing (QE), and its defense when it was applied in Britain, are analyzed through this lens. An empirical analysis of the effect of reserves on lending is conducted; we do not find evidence that QE "worked," either by a direct effect on money spending, or through an equity market effect. These findings are placed in a historical context in a comparison with earlier money control experiments in the UK.

Purpose of the article: The main purpose of the paper is empirically evaluating selectivity skills and market timing ability of Polish fund managers during the period from January 2009 to November 2014. After the global financial crisis of 2008, in this period of quantitative easing (QE), thanks to an increase in the money supply, a capital flow from developed countries to developing countries was observed. In this study, we try to analyse that although the financial market in Poland made an incredible progress, whether fund managers show better or worse performance than the market. Methodology/Methods: In order to evaluate fund manager performances, Jensen alpha (1968) is computed, which depicts selectivity skills of fund managers. For determining market timing ability of fund managers, Treynor & Mazuy (1966) regression analysis and Henriksson & Merton (1981) regression analysis are applied. Fund performances are evaluated using Warsaw Stock Exchange Index as the benchmark index. Scientific aim: In this study, we have tried to evaluate selectivity skills and market timing ability of Polish fund managers. A total of 14 equity fund managers' performances are analysed. The study can be guiding especially for investors who are interested in Polish equity fund performances in a period where emerging stock markets outperformed with quantitative easing. Findings: Jensen (1968) alphas indicate that over this period fund managers did not have selective ability, as none of the 14 funds had statistically significant positive alphas. Furthermore, Treynor & Mazuy (1966) and Henriksson & Merton (1981) regression analysis indicate that over the same period fund managers did not also have market timing ability, as again none of the 14 funds had statistically significant positive coefficients. Conclusions: In this work, we can detect that in the era of quantitative easing, although the financial market in Poland made an incredible progress, the fund returns were generally lower than the stock market and Polish fund managers could not display a good performance both in selectivity skills and market timing abilities.

The purpose of this research is to compare and contrast of interest rates in Ireland during the recession of the 1980s and during the Financial Crisis of 2008. The impact of the global recessions of the 1980s and the Financial Crisis of 2008 appear to have excessively affected Ireland. Both of these recessions affected every Irish individual and led to high unemployment rates and mass emigration. The aim of this research is to highlight the similarities and differences between the recession of the 1980s and the Financial Crisis of 2008, in order to assess the role played by the Central Bank of Ireland and the European Central Bank during these periods. This research will focus on both the interest rates and policy responses during these recessions.
In order to establish these aims this research will use a qualitative method of collecting data. The required data will be obtained from the OECD databases, The World Bank, the Central Bank of Ireland and the European Central Bank. This will be desk assessed by referencing the relevant academic and literary sources.

The paper comments on the sentence of the German Federal Constitutional Court which declared Germany's participation in the public sector purchase program, PSPP, implemented by the European Central Bank-ECB, partially unconstitutional. The paper discusses the current and future implications of the important decision