February 2017 issue contents
Effectiveness and Transmission of the ECB's Balance Sheet Policies

by Jef Boeckxa, Maarten Dosscheb and Gert Peersmanc


We estimate the effects of exogenous innovations to the balance sheet of the ECB since the start of the financial crisis within a structural VAR framework. An expansionary balance sheet shock stimulates bank lending, reduces interest rate spreads, leads to a depreciation of the euro, and has a positive impact on economic activity and inflation. A counterfactual analysis reveals that the macroeconomic consequences of the balance sheet policies in the aftermath of the crisis have been substantial. For example, euro-area output and inflation would have been more than 1 percent lower in 2012 without the threeyear LTRO programs. Finally, we find that the effects on output turn out to be smaller in the member countries that have been more affected by the financial crisis, in particular those countries where the banking system is less well capitalized.

JEL Codes: C32, E30, E44, E51, E52.

Full article (PDF, 37 pages, 647 kb)

a National Bank of Belgium 
b European Central Bank
c Ghent University