Lorenzo Burlon

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"Macroeconomic effects of non-standard monetary policy measures in the euro area: the role of corporate bond purchases"


Joint with Anna Bartocci, Alessandro Notarpietro, and Massimiliano Pisani.


First version: September 2017.


Abstract This paper evaluates the macroeconomic effects of the corporate sector purchase programme (CSPP) implemented in the euro area by the Eurosystem. For this purpose we calibrate and simulate a monetary-union dynamic general equilibrium model. We assume that entrepreneurs can finance their spending by issuing bonds in the domestic corporate bond market and by borrowing from domestic banks. We found that the March 2016 CSPP boosts euro-area GDP by around 0.3% in the second year (peak level). Inflation rises too but by a smaller amount. Second, taking into account the programme’s extension in December 2016, its overall impact on GDP amounts to 0.6%. Third, the CSPP also stimulates banking activity, because the improvement in macroeconomic conditions leads to higher demand for loans from households and entrepreneurs. Fourth, an early exit from the CSPP negatively impacts its macroeconomic effectiveness, while forward guidance on monetary policy rate enhances it.

Keywords: DSGE models, financial frictions, open-economy macroeconomics, non-standard monetary policy, corporate bonds, forward guidance, euro area.

JEL classifications: E43; E44; E52; E58.


Working paper versions:

Temi di discussione (Working papers) 1136, Bank of Italy (2017).


Press releases:

- Banca d'Italia, Annual Report, 31 May 2017