Is quantitative easing long run beneficial to an economy?
Understand the Problem
The question is asking whether quantitative easing (a monetary policy used by central banks) has long-term benefits for an economy. This involves evaluating its impacts on inflation, employment, and economic growth over an extended period.
Answer
QE offers short-term benefits like lowering borrowing costs, but its long-term impacts are unclear and potentially negative.
Quantitative easing (QE) can provide benefits like reducing long-term borrowing costs and boosting economic spending in the short term, but its long-term benefits are less clear and can involve drawbacks such as reduced central bank independence and potential disruptions in financial markets.
Answer for screen readers
Quantitative easing (QE) can provide benefits like reducing long-term borrowing costs and boosting economic spending in the short term, but its long-term benefits are less clear and can involve drawbacks such as reduced central bank independence and potential disruptions in financial markets.
More Information
While QE helps stimulate short-term economic activity and control inflation, it may also undermine central bank independence and distort financial markets, posing longer-term risks.
Sources
- Quantitative Easing (QE): What It Is and How It Works - Investopedia - investopedia.com
- Quantitative Easing: Considering Its Benefits and Drawbacks - sites.lsa.umich.edu
- Quantitative Easing: How Well Does This Tool Work? | St. Louis Fed - stlouisfed.org
