Quantitative easing is often criticised due to side effects on asset price valuation and risk taking. This column compares the financial side effects of conventional monetary policy to those of quantitative easing, based on the amount of inflation generated by each policy. A systematic comparison of multiple measures of financial side effects for the euro area, the UK, and the US suggests that the side effects of quantitative easing and conventional monetary policy are roughly the same.
Should monetary policy take the financial side effects of quantitative easing (QE) into account? In this column, we argue that any such side effects need to be compared against the side effects of conventional monetary policy, the tool central banks rely on away from theRead More »