ECB’s quantitative easing – how it affects the economy

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dc.contributor Aalto University en
dc.contributor Aalto-yliopisto fi
dc.contributor.advisor Murto, Pauli
dc.contributor.advisor Mustonen, Mikko
dc.contributor.author Luukkonen, Elisa
dc.date.accessioned 2018-05-08T07:27:03Z
dc.date.available 2018-05-08T07:27:03Z
dc.date.issued 2017
dc.identifier.uri https://aaltodoc.aalto.fi/handle/123456789/30655
dc.description.abstract To address the prolonged low inflation in the Eurozone and to overcome the zero lower bound, the ECB introduced its quantitative easing programme, the Expanded Asset Purchase Programme (APP) early 2015. In this thesis, I examine the mechanisms how such a large-scale asset purchase programme affects the economy, especially sovereign yields and inflation. I also analyse whether the purchases under the APP have influenced the euro area economy as the theory suggests using empirical research about the impact. I also bring forward, what caused the shift in ECB's monetary policy from interest policy to balance sheet policy. The thesis is a literature review in which I use the theoretical framework of Krishnamurthy and Vissing- Jorgensen (2011) and work of Joyce et al. (2012) to analyse the transmission channels of quantitative easing. The effects of quantitative easing come through the expansion of the central bank’s balance sheet and the maturity of an asset plays a key role in the transmission. Quantitative easing has both ex ante and ex post effects: Through purchases, the central bank sends a signal that it will keep short-term interests low as well as it creates scarcity of bonds in the markets, which pushes up their prices. I show that the APP has dampened yield curves of euro countries and led to rising inflation and subtle GDP growth. en
dc.format.extent 31
dc.format.mimetype application/pdf en
dc.language.iso en en
dc.title ECB’s quantitative easing – how it affects the economy en
dc.type G1 Kandidaatintyö fi
dc.contributor.school Kauppakorkeakoulu fi
dc.contributor.school School of Business en
dc.contributor.department Taloustieteen laitos fi
dc.subject.keyword quantitative easing en
dc.subject.keyword monetary policy en
dc.subject.keyword ECB en
dc.subject.keyword expanded asset purchase programme en
dc.subject.keyword bond yields en
dc.subject.keyword inflation en
dc.subject.keyword sovereign bonds en
dc.identifier.urn URN:NBN:fi:aalto-201805082106
dc.type.ontasot Bachelor's thesis en
dc.type.ontasot Kandidaatintyö fi
dc.programme Taloustiede fi


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