Side effects of non-standard monetary policy: How long is the short-run?

15-02-2017

In the short- to medium-run, non-standard monetary policy helps to stimulate the economy and stabilize financial markets. However, it is also widely acknowledged that side effects tend to materialize in the medium- to long-run. Thus, the time dimension is a crucial factor in assessing the riskiness of this policy approach. For the February 2017 session of the Monetary Dialogue, the Committee on Economic and Monetary Affairs (ECON) of the EP has requested a set of briefings to key monetary experts to address the side effects of non-standard monetary policy. Particular attention is given to the possibility that the ECB expansionary monetary policy may have contributed to the slowdown in labour productivity growth experienced by several member countries after the global financial crisis.

In the short- to medium-run, non-standard monetary policy helps to stimulate the economy and stabilize financial markets. However, it is also widely acknowledged that side effects tend to materialize in the medium- to long-run. Thus, the time dimension is a crucial factor in assessing the riskiness of this policy approach. For the February 2017 session of the Monetary Dialogue, the Committee on Economic and Monetary Affairs (ECON) of the EP has requested a set of briefings to key monetary experts to address the side effects of non-standard monetary policy. Particular attention is given to the possibility that the ECB expansionary monetary policy may have contributed to the slowdown in labour productivity growth experienced by several member countries after the global financial crisis.

Externý autor

Michael HACHULA, Michele PIFFER, Malte RIETH (DIW Berlin), Roman HORVATH (CASE, Center for Social and Economic Research), Daniel GROS (CEPS, Centre for European Policy Studies)