Quantitative Easing: Will It Generate Demand or Inflation

World Economics, Vol. 10, No. 2, pages 27-40, 2009

Posted: 4 Sep 2009 Last revised: 4 Sep 2013

See all articles by Colin Ellis

Colin Ellis

Hult International Business School (London)

Date Written: September 2, 2009

Abstract

Central banks around the world have moved to cut interest rates to record lows, with many in advanced economies going further and embracing full quantitative easing - creating new money to inject into the economy. This paper examines why quantitative easing has been necessary, and whether it is likely to result in higher demand or instead show up in higher inflation. Given the retrenchment in household spending, the risk is that quantitative easing has more impact on prices than output. And, with some first warning signs perhaps already evident in commodity markets, policymakers could face considerable difficulties unwinding the monetary stimulus.

Keywords: Quantitative easing, monetary policy

JEL Classification: E31, E58

Suggested Citation

Ellis, Colin, Quantitative Easing: Will It Generate Demand or Inflation (September 2, 2009). World Economics, Vol. 10, No. 2, pages 27-40, 2009, Available at SSRN: https://ssrn.com/abstract=1466879

Colin Ellis (Contact Author)

Hult International Business School (London) ( email )

35 Commercial Road
London, E1 1LD
United Kingdom

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