Is quantitative easing long run beneficial to an economy?
Understand the Problem
The question is asking about the long-term effects of quantitative easing on an economy, specifically whether it is beneficial or not. It seeks to explore economic theory and empirical evidence regarding the impact of such monetary policy measures over an extended period.
Answer
QE lowers borrowing costs and supports spending, but long-term effects are debated.
Quantitative easing (QE) can be beneficial in the long run as it lowers long-term borrowing costs and supports economic spending. However, its broader impact on the economy is debated, with concerns about central bank independence and potential negative effects on financial markets.
Answer for screen readers
Quantitative easing (QE) can be beneficial in the long run as it lowers long-term borrowing costs and supports economic spending. However, its broader impact on the economy is debated, with concerns about central bank independence and potential negative effects on financial markets.
More Information
Quantitative easing is used to stimulate spending and economic growth, which may help recover from a recession. However, it might lead to concerns such as affecting central bank independence and increasing financial vulnerabilities by removing safe assets from markets.
Sources
- Quantitative Easing (QE): What It Is and How It Works - Investopedia - investopedia.com
- Quantitative Easing: Does It Work? - Investopedia - investopedia.com
- Quantitative Easing: Considering Its Benefits and Drawbacks - sites.lsa.umich.edu
