Understanding the effects of growing central bank balance sheets on investment

Abstract

AbstractWhat role does unconventional monetary policy – and particularly unconventional policies such as private asset purchases under quantitative easing or lender of last resort scheme – play in influencing economic growth directly? The literature looks at the effects of post‐2007 central bank asset purchases on GDP growth and – in limited cases – on investment. Yet academics and central bankers have not tried to understand the effects of private securities purchases alone, while controlling for broader macroeconomic effects. This article summarises the existing literature, documenting the widespread use of private securities purchases by central banks across the world. The literature shows the potentially beneficial effects of these purchases, pointing the way for further scholarly work about central banks' private securities purchases.