Unconventional Monetary Policy

Course overview

In recent years, after reducing their reference interest rates at nearly 0%, most central banks designed a variety of novel monetary policy tools to fight recessions, including communication strategies, credit policies, and large-scale asset purchases. These new measures often referred to as “unconventional” monetary policies. The objective of this course is to provide participants with a thorough understanding of the state-of-the-art research on different types of unconventional policies, of their costs and benefits, and of their effects on financial and aggregate economic variables.

The BSE Intensive Course on Unconventional Monetary Policy’s faculty includes some of the leading academics and economists in the area of monetary policy, with extensive experience in policymaking institutions such as the Federal Reserve and the European Central Bank. Instructors include (see detailed bios below):

  • Andrea Ferrero, professor at the University of Oxford
  • Jordi Galí (CREI, UPF and BSE), a regular consultant to the European Central Bank, Norges Bank and Sveriges Bank
  • Domenico Giannone, research officer at the Federal Reserve of New York
  • José-Luis Peydró (ICREA-UPF and BSE), consultant to the U.S. Federal Reserve, IMF, and Bank of Spain
  • Oreste Tristani, senior advisor to the European Central Bank

Key benefits

  • the differences between conventional and unconventional monetary policies
  • the rationale behind alternative unconventional tools, and the associated costs and benefits
  • the challenges faced by the Federal Reserve and the European Central Bank, and the resulting policy choices
  • the relationship between unconventional monetary policies and other macroeconomic reforms
  • the transmission mechanism of unconventional policies, and their impact on financial institutions
  • the effects of unconventional policies on financial assets, and aggregate economic variables
  • how financial traders respond to unconventional policies

After an introductory overview of the main approaches proposed in the literature to study conventional and unconventional policies, the course will describe the different policy tools adopted by central banks in the aftermath of the recent financial crisis. Special attention will be devoted to illustrate the costs and benefits of alternative policy measures, such as credit facilities, large-scale asset purchases, exchange-rate policies and money financed fiscal expenditure.

The course will also discuss the main empirical techniques, and the main results obtained in the literature about the effects of monetary policy on financial assets and aggregate economic variables, with a special attention to the practical experience of the Federal Reserve and the European Central Bank.