Central Bank Quantitative Easing as an Emerging Political Liability

Xing, Victor (2017): Central Bank Quantitative Easing as an Emerging Political Liability.

Abstract

Officials from major central banks have previously acknowledged QE programs’ distributional effects but expected aggregate economic benefits of these unconventional policies to outweigh their costs.

Post-crisis asset price appreciation became well entrenched under the effect of QE, which out-paced median wage growth to unintentionally burden low-to-middle income households and individuals with limited asset ownership. Subsequently, rising inequality fueled discontent and contributed to the rise of anti-establishment political candidates

Efforts by elected officials to ease the effects of policy-induced inequality would likely bolster support toward further redistribution policies such as “helicopter money” to threaten central bank monetary policy independence

• Item Type: MPRA Paper
• Language: English
• Keywords: Quantitative Easing, Distributional Effects, Helicopter Money, Debt Monetization
• Subjects: E - Macroeconomics and Monetary Economics > E5 - Monetary Policy, Central Banking, and the Supply of Money and Credit > E50 - General; E - Macroeconomics and Monetary Economics > E5 - Monetary Policy, Central Banking, and the Supply of Money and Credit > E52 - Monetary Policy; H - Public Economics > H5 - National Government Expenditures and Related Policies > H50 - General

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