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Global Corporate Bond Issuance
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Global Corporate Bond Issuance

What Role for US Quantitative Easing?

Marco Lo Duca, Giulio Nicoletti and Ariadna Vidal Martinez
ECB, 2014
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Editorial Rating

8

Qualities

  • Innovative

Recommendation

What was once heresy is today banality: Now that nearly every central bank either has undertaken or is pursuing quantitative easing (QE), it is probably time to retire the phrase “unconventional monetary policy” to describe it. Marco Lo Duca, Giulio Nicoletti and Ariadna Vidal Martinez, economists at the European Central Bank, show how the brainstorms and experiments of academics and central bankers affect the real world, particularly in the aftermath of the 2008 financial crisis. getAbstract recommends this informative analysis of the Federal Reserve’s QE policies and their effects on corporate bond issuance around the world.

Take-Aways

  • Research indicates that central banks’ quantitative easing (QE) policies, in the form of large asset purchases, have encouraged global corporate bond issuance.
  • In the developed world, the impact of the US Federal Reserve’s QE policies occurs mostly through “flow effects”: Investors must rebalance their portfolios due to the central bank’s asset purchases.
  • In the developing world, the Fed’s QE has primarily “stock effects”: Central bank purchases lower interest rates and create favorable financial conditions for companies to issue bonds.

About the Authors

Marco Lo Duca, Giulio Nicoletti and Ariadna Vidal Martinez are European Central Bank economists.

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