The redistributive effects of quantative easing. Developing an illustrative model of the key mechanisms of quantitatie easing
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2016-08-22
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en
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Since the Financial crisis of 2007-8, multiple central banks in the developed countries engaged in some kind of Quantitative Easing (QE), either large-scale asset purchases, improved central bank lending facilities or ‘Operation Twist’, to stimulate their economies. The current study develops an illustrative model that investigates the effect of these different types of QE-programmes on the distribution of income. All QE-policy discussed in the current study affect the income distribution by influencing the long-term and short-term interest rates. The initial effects of the different types of QE are ambiguous, however, when the economic agents react on the QE-policies income inequality increases unanimously. These results show that unconventional monetary policies, such as QE, have re-distributional side effects.
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Faculteit der Managementwetenschappen