THE MACROECONOMIC EFFECTS OF QUANTITATIVE EASING POLICIES

The Effects of Quantitative Easing on Potential Output Growth: Evidence from the US and the Eurozone CHAPTER 2 In this paper, I assess the impact of an increase of domestic assets in the balance sheets of the Federal Reserve and the European Central Bank following the global financial crisis that started in 2007. This asset increase is well represented by the so-called Quantitative Easing (QE) policy. Overall, this unconventional monetary policy was implemented to positively influence, among other things, the labour productivity growth rate and the natural or potential growth rate. I provide quarterly and annual estimates of potential growth for the United States (US) and Eurozone economies using an AS state-space model with timevarying parameters and a Kalman filtering methodology. Next, I select the best time series estimates for each area and I run different linear regression models, using one proxy for QE, one proxy for labour force, and three proxies for labour productivity, to detect the impact of this policy on the estimated potential growth rates of the US and the Euro Area. Keywords: quantitative easing, unconventional monetary policy, potential output, United States, Eurozone. JEL Codes: C13, C32, E52, E58 Supervisor: Professor Matteo Lanzafame