Journal of Business & Economic Policy

Unconventional Expansionary Monetary Policies. An Economic Analysis of Quantitative Easing
Jordi Franch Parella

Abstract
Expansionary monetary and fiscal policies followed the 2008 great recession. The Federal Reserve, and the main central banks, responded with severe cuts of the interest rate in response to the emerging economic distress. With interest rates in the lower bound, productivity has not recovered its past trend. Quantitative Easing is an ultra expansionary monetary policy whereby a central bank buys government bonds and private sector assets in order to stimulate the economy. Although this process temporarily could relieve the governments, gaining time to implement structural reforms, it has eventually created a debt bubble that impairs the economic performance. Financial asset prices have risen indiscriminately, having adverse consequences for the distribution of wealth. At the end, printing money does not mean creating growth and debt accumulation, money creation, unfunded liabilities and malinvestments continue unabated threatening the immediate future of the global economy. The overall balance of QE is very disappointing.

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