Macroeconomic Effects of Unconventional Monetary Policy in the Eurozone Using Non-Linear Models

The present study examines the efficiency of the unconventional monetary policy measures adopted by the Eurosystem during the period 2008 – 2016 in terms of boosting the eurozone’s economy. Empirical investigation, which is based on a time-varying vector autoregressive model, suggests that unconventional monetary policy measures can lead to an increase in both inflation and GDP during the period 2007-2016. However, the effect of an unconventional monetary policy shock has increased significantly with the adoption of the Quantitative Easing policy from the ECB. Overall, the expansion of the assets purchase program and the strong commitment on behalf of the ECB to continue the unconventional monetary policy interventions as long as it is required to achieve the inflation target have contributed decisively to the success of the unconventional monetary policy measures