Open Economies Review

, Volume 28, Issue 3, pp 499–522 | Cite as

Central Bank Balance Sheet Policies and Inflation Expectations

  • Jan Willem van den End
  • Christiaan Pattipeilohy
Research Article
First Online:
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Abstract

We analyse the empirical effects of credit easing and quantitative easing on inflation expectations and exchange rates. Both monetary policy strategies are summarised in measures for composition and size of the central bank balance sheet and are included in a VAR model. The results show that changes in balance sheet size had positive, albeit weak effects on inflation expectations in Japan, while the effects were negligible in the euro area. By contrast, an increasing balance sheet size is associated with reduced short-term inflation expectations in the US and UK, pointing at negative signalling effects. Shocks to balance sheet size or composition have no substantial effects on long-term inflation expectations in the euro area, US and UK. An expanding balance sheet size is associated with a depreciation of the euro, pound sterling and Japanese yen.

Keywords

Central banks and their policies Monetary policy 

JEL classification

E58 E52 
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Notes

Acknowledgments

We thank Peter van Els, Jakob de Haan, Richhild Moessner and two anonymous referees for their comments on a previous version of the paper and Martin Admiraal for statistical support.

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Copyright information

© Springer Science+Business Media New York 2016

Authors and Affiliations

  • Jan Willem van den End
    • 1
  • Christiaan Pattipeilohy
    • 1
  1. 1.De Nederlandsche BankAmsterdamThe Netherlands

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