IDEAS home Printed from https://ideas.repec.org/p/iie/wpaper/wp12-22.html
   My bibliography  Save this paper

Assessing Potential Inflation Consequences of QE after Financial Crises

Author

Listed:
  • Samuel Reynard

    (Peterson Institute for International Economics)

Abstract

Financial crises have been followed by different inflation paths which are related to monetary policy and money creation by the banking sector during those crises. Accounting for equilibrium changes and non-linearity issues, the empirical relationship between money and subsequent inflation developments has remained stable and similar in crisis and normal times. This analysis can explain why the financial crisis in Argentina in the early 2000s was followed by increasing inflation, whereas Japan experienced deflation in the 1990s and 2000s despite quantitative easing. Current quantitative easing policies should lead to increasing and persistent inflation over the next years.

Suggested Citation

  • Samuel Reynard, 2012. "Assessing Potential Inflation Consequences of QE after Financial Crises," Working Paper Series WP12-22, Peterson Institute for International Economics.
    • Handle: RePEc:iie:wpaper:wp12-22
    as

    Download full text from publisher

    File URL: https://www.piie.com/publications/working-papers/assessing-potential-inflation-consequences-qe-after-financial-crises
    Download Restriction: no
    ---><---

    References listed on IDEAS

    as
    1. Carmen M. Reinhart & Kenneth S. Rogoff, 2009. "The Aftermath of Financial Crises," American Economic Review, American Economic Association, vol. 99(2), pages 466-472, May.
    2. Nelson, Edward, 2003. "The future of monetary aggregates in monetary policy analysis," Journal of Monetary Economics, Elsevier, vol. 50(5), pages 1029-1059, July.
    3. Nathan Balke & Robert J. Gordon, 1986. "Appendix B: Historical Data," NBER Chapters, in: The American Business Cycle: Continuity and Change, pages 781-850, National Bureau of Economic Research, Inc.
    4. Dr. Samuel Reynard, 2006. "Money and the Great Disinflation," Working Papers 2006-07, Swiss National Bank.
    5. McCallum, Bennett T., 1990. "Inflation: Theory and evidence," Handbook of Monetary Economics, in: B. M. Friedman & F. H. Hahn (ed.), Handbook of Monetary Economics, edition 1, volume 2, chapter 18, pages 963-1012, Elsevier.
    6. Reynard, Samuel, 2007. "Maintaining low inflation: Money, interest rates, and policy stance," Journal of Monetary Economics, Elsevier, vol. 54(5), pages 1441-1471, July.
    7. Robert J. Gordon, 1986. "The American Business Cycle: Continuity and Change," NBER Books, National Bureau of Economic Research, Inc, number gord86-1, July.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Niall Ferguson & Andreas Schaab & Moritz Schularick, 2015. "Central Bank Balance Sheets: Expansion and Reduction since 1900," CESifo Working Paper Series 5379, CESifo.
    2. Matteo Barigozzi & Antonio M. Conti, 2018. "On the Stability of Euro Area Money Demand and Its Implications for Monetary Policy," Oxford Bulletin of Economics and Statistics, Department of Economics, University of Oxford, vol. 80(4), pages 755-787, August.
    3. R. O. Odenu Iyede & Felix. E. Onah & Cletus. C. Agu, 2018. "A Survey of Studies on Money Demand and Inflation Amidst Banking Crisis," Journal of Accounting, Business and Finance Research, Scientific Publishing Institute, vol. 2(2), pages 34-54.
    4. Boris Hofmann & Feng Zhu, 2013. "Central bank asset purchases and inflation expectations," BIS Quarterly Review, Bank for International Settlements, March.

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Edward Nelson, 2008. "Why Money Growth Determines Inflation in the Long Run: Answering the Woodford Critique," Journal of Money, Credit and Banking, Blackwell Publishing, vol. 40(8), pages 1791-1814, December.
    2. Peter Kugler & Samuel Reynard, 2022. "Money and inflation in Switzerland," Swiss Journal of Economics and Statistics, Springer;Swiss Society of Economics and Statistics, vol. 158(1), pages 1-13, December.
    3. Anderson, Richard G. & Bordo, Michael & Duca, John V., 2017. "Money and velocity during financial crises: From the great depression to the great recession," Journal of Economic Dynamics and Control, Elsevier, vol. 81(C), pages 32-49.
    4. Benati, Luca, 2009. "Long run evidence on money growth and inflation," Working Paper Series 1027, European Central Bank.
    5. Reynard, Samuel, 2023. "Central bank balance sheet, money and inflation," Economics Letters, Elsevier, vol. 224(C).
    6. Farmer, Roger E. A. & Jang-Ting, Guo, 1995. "The econometrics of indeterminacy: an applied study," Carnegie-Rochester Conference Series on Public Policy, Elsevier, vol. 43(1), pages 225-271, December.
    7. Luisanna Onnis & Patrizio Tirelli, 2015. "Shadow economy: Does it matter for money velocity?," Empirical Economics, Springer, vol. 49(3), pages 839-858, November.
    8. Kim Abildgren, 2016. "A century of macro-financial linkages," Journal of Financial Economic Policy, Emerald Group Publishing Limited, vol. 8(4), pages 458-471, November.
    9. Dufour, Jean-Marie & Farhat, Abdeljelil & Hallin, Marc, 2006. "Distribution-free bounds for serial correlation coefficients in heteroskedastic symmetric time series," Journal of Econometrics, Elsevier, vol. 130(1), pages 123-142, January.
    10. J. Peter Ferderer, 1994. "Credibility of the Interwar Gold Standard, Uncertainty, and the Great Depression," Economics Working Paper Archive wp_102, Levy Economics Institute.
    11. Mark Wheeler & Susan Pozo, 1997. "Is the world economy more integrated today than a century ago?," Atlantic Economic Journal, Springer;International Atlantic Economic Society, vol. 25(2), pages 139-154, June.
    12. Ray Fair, 2007. "Presidential and Congressional Vote-Share Equations," Yale School of Management Working Papers amz2389, Yale School of Management, revised 18 Mar 2007.
    13. Gordon, Robert J., 2005. "The 1920s and the 1990s in Mutual Reflection," CEPR Discussion Papers 5412, C.E.P.R. Discussion Papers.
    14. John Thornton, 2008. "Money, Output And Inflation In African Economies1," South African Journal of Economics, Economic Society of South Africa, vol. 76(3), pages 356-366, September.
    15. Lee, Jim, 2006. "The comovement between output and prices: Evidence from a dynamic conditional correlation GARCH model," Economics Letters, Elsevier, vol. 91(1), pages 110-116, April.
    16. Christina D. Romer & David H. Romer, 2004. "Choosing the Federal Reserve Chair: Lessons from History," Journal of Economic Perspectives, American Economic Association, vol. 18(1), pages 129-162, Winter.
    17. Gebhard Kirchgässner & Jürgen Wolters, 2010. "The Role of Monetary Aggregates in the Policy Analysis of the Swiss National Bank," Swiss Journal of Economics and Statistics (SJES), Swiss Society of Economics and Statistics (SSES), vol. 146(I), pages 221-253, March.
    18. James Lothian, 2011. "Why Money Matters: A Fourth Natural Experiment," Open Economies Review, Springer, vol. 22(2), pages 179-187, April.
    19. Bordo, Michael D. & Haubrich, Joseph G., 2010. "Credit crises, money and contractions: An historical view," Journal of Monetary Economics, Elsevier, vol. 57(1), pages 1-18, January.
    20. Robert F. Mulligan, 2016. "An Empirical Comparison of Canadian-American Business Cycle Fluctuations with Special Reference to the Phillips Curve," Advances in Austrian Economics, in: Studies in Austrian Macroeconomics, volume 20, pages 163-194, Emerald Group Publishing Limited.

    More about this item

    Keywords

    Financial crises; inflation; monetary aggregates; quantitative easing;
    All these keywords.

    JEL classification:

    • E52 - Macroeconomics and Monetary Economics - - Monetary Policy, Central Banking, and the Supply of Money and Credit - - - Monetary Policy
    • E58 - Macroeconomics and Monetary Economics - - Monetary Policy, Central Banking, and the Supply of Money and Credit - - - Central Banks and Their Policies
    • E41 - Macroeconomics and Monetary Economics - - Money and Interest Rates - - - Demand for Money

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:iie:wpaper:wp12-22. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Peterson Institute webmaster (email available below). General contact details of provider: https://edirc.repec.org/data/iieeeus.html .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.