Monetary policy evaluation. A counterfactual analysis based on dynamic factor models Articles uri icon

authors

  • LOPEZ BUENACHE, GERMAN

publication date

  • April 2017

start page

  • 460

end page

  • 466

issue

  • 7

volume

  • 24

International Standard Serial Number (ISSN)

  • 1350-4851

Electronic International Standard Serial Number (EISSN)

  • 1466-4291

abstract

  • This article complements the recent literature analysing the effects of the unconventional monetary stimuli applied after the Great Recession by proposing an intuitive and easy-to-implement method to evaluate different exit strategies towards a traditional monetary context. This approach, useful for central bankers or researchers interested in the effects of tapering, allows us to evaluate the consequences of a given monetary policy path on the future evolution of key macroeconomic indicators. The results based on this methodology provide a measurement of the differences in economic performance under contractionary and expansionary policies and support the recent success of monetary stimuli in boosting real indicators while having little effect on inflation.

keywords

  • monetary policy; quantitative easing; zero lower bound; shadow rate; tapering