Central banks must exit asset purchase programmes with care, paper finds
Bundesbank paper uses model of eurozone to judge effects of asset purchases
A discussion paper published by the German Bundesbank examines the welfare effects of asset purchases by central banks.
In The optimal conduct of central bank asset purchases, Matthieu Darracq Pariès and Michael Kühl use a dynamic general stochastic equilibrium model of the eurozone.
They find that the multipliers of the European Central Bank’s asset purchase programmes get stronger when two conditions are fulfilled. The first is that the lower bound on the policy rate becomes binding. The
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