Quantitative Easing in Japan and the UK An Econometric Evaluation of the Impacts of Unconventional Monetary Policy on the Returns of Aggregate Output and Price Levels

The research finds that the actions of the BoJ were more successful in raising aggregate levels of output and price than those of the BoE. In Japan, all financial variables analysed were found to transmit the benefits of QME, whilst in the UK the effect only occurs through the stock market and bank lending. The overall results however, are found to be small. To analyse the effects of the most recent policies of QME by the Bank of Japan (BoJ) and the Bank of England (BoE) on aggregate levels of output and prices in Japan and the UK, We perform two-step VAR and VEC analysis to first identify the effects of QMEP before determining the financial transmission mechanism by which these effects take place. This analysis aims to make contribution to the research surrounding the effects of QMEP. It is wholly reasonable to presume that both the Japanese and UK economies may experience similar economic difficulties in the future and further understanding of the effects of QMEP will enable more targeted policy decisions to be implemented to effectively protect stable inflation levels and stimulate future economic growth.