Peterson Institute publications
The Peterson Institute for International Economics is a private, nonprofit, nonpartisan
research institution devoted to the study of international economic policy. More › ›
RSS News Feed Search

Working Paper 12-22

Assessing Potential Inflation Consequences of QE after Financial Crises

by Samuel Reynard, Peterson Institute for International Economics

November 2012

View full document [pdf]


Financial crises have been followed by different inflation paths which are related to monetary policy and money creation by the banking sector during those crises. Accounting for equilibrium changes and non-linearity issues, the empirical relationship between money and subsequent inflation developments has remained stable and similar in crisis and normal times. This analysis can explain why the financial crisis in Argentina in the early 2000s was followed by increasing inflation, whereas Japan experienced deflation in the 1990s and 2000s despite quantitative easing. Current quantitative easing policies should lead to increasing and persistent inflation over the next years.


RELATED LINKS

Book: Responding to Financial Crisis: Lessons from Asia Then, the United States and Europe Now October 2013

Policy Brief 13-21: Lehman Died, Bagehot Lives: Why Did the Fed and Treasury Let a Major Wall Street Bank Fail? September 2013

Op-ed: Misconceptions About Fed's Bond Buying September 2, 2013

Op-ed: A Dose of Reality for the Dismal Science April 19, 2013

Op-ed: Five Myths about the Euro Crisis September 7, 2012

Working Paper 12-7: Lessons from Reforms in Central and Eastern Europe in the Wake of the Global Financial Crisis April 2012

Article: Why the Euro Will Survive: Completing the Continent's Half-Built House August 22, 2012

Policy Brief 12-18: The Coming Resolution of the European Crisis: An Update June 2012

Policy Brief 12-20: Why a Breakup of the Euro Area Must Be Avoided: Lessons from Previous Breakups August 2012

Book: Sustaining China's Economic Growth after the Global Financial Crisis January 2012

Testimony: A New Regime for Regulating Large, Complex Financial Institutions December 7, 2011

Working Paper 11-2: Too Big to Fail: The Transatlantic Debate January 2011

Policy Brief 10-24: The Central Banker's Case for Doing More October 2010

Policy Brief 10-3: Confronting Asset Bubbles, Too Big to Fail, and Beggar-thy-Neighbor Exchange Rate Policies February 2010

Article: The Dollar and the Deficits: How Washington Can Prevent the Next Crisis November 2009

Speech: Rescuing and Rebuilding the US Economy: A Progress Report July 17, 2009

Testimony: Needed: A Global Response to the Global Economic and Financial Crisis March 12, 2009

Testimony: A Proven Framework to End the US Banking Crisis Including Some Temporary Nationalizations February 26, 2009

Speech: Financial Regulation in the Wake of the Crisis June 8, 2009

Paper: World Recession and Recovery: A V or an L? April 7, 2009

Op-ed: Stopping a Global Meltdown November 12, 2008

Book: Banking on Basel: The Future of International Financial Regulation September 2008

Book: Bailouts or Bail-ins? Responding to Financial Crises in Emerging Economies August 2004