Unconventional monetary policy: an application to the Eurozone.

Abstract

This thesis examines the theoretical underpinnings of unconventional monetary policy and the challenges central banks face when they have to employ unconventional monetary policy measures in practice. The theoretical and empirical justification behind unconventional monetary policy is laid out, as well as an overview of recent unconventional monetary policy measures undertaken by central banks around the world, with an emphasis on the European Central Bank and the Federal Reserve. A Dynamic Stochastic General Equilibrium model is used to assess the implications of financial turmoil and unconventional monetary policy for the central bank of a currency union.