Template-type: ReDif-Paper 1.0 
Author-Name: Meijers, Huub
Author-Email: huub.meijers@maastrichtuniversity.nl 
Author-workplace-name: UNU-MERIT, and SBE, Maastricht University
Author-Name: Muysken, Joan
Author-Email: j.muysken@maastrichtuniversity.nl
Author-workplace-name: UNU-MERIT, CofFEE-Europe and SBE, Maastricht University
Title: The impact of quantitative easing in the Netherlands: A stock-flow consistent 
	 approach 
Abstract: The Netherlands is a prosperous, small open economy with a large 
	 financial sector and a trade balance surplus. Current observations 
	 suggest that the quantitative easing (QE) initiated by the ECB has a 
	 strong impact on the financial sector and international capital flows, 
	 while the impact on economic growth is relatively weak in the 
	 Netherlands. We analyse these stylised facts using the stock-flow 
	 consistent (SFC) approach which builds on earlier work.  
	 We develop an open economy SFC model for the Netherlands with an 
	 elaborated financial sector, including pension funds which invest to a 
	 large extent abroad, and recognise that firms invest a considerable part 
	 of their financial assets abroad. This enables us to explain that the 
	 direct effects of QE are relatively small due to substantial foreign 
	 selling of Dutch government bonds and recapitalisations of the financial 
	 sector. The indirect effects of QE are much stronger. They influence the 
	 economy through low interest rates and exchange rate appreciation, but 
	 have unintended consequences through increased housing prices and asset 
	 prices - the latter two are endogenous in our model.  
	 We calibrate the model to mimic the observed stylised facts for the 
	 Netherlands and perform some policy experiments
Keywords: stock-flow consistent modelling, quantitative easing, current account surplus 
Classification-JEL: E44, B5, E6, F45, G21, G32, O16
Series: UNU-MERIT Working Papers
Creation-Date: 20161207
Number: 2016-067
File-URL: https://unu-merit.nl/publications/wppdf/2016/wp2016-067.pdf
File-Format: application/pdf
File-Size: 275 kb
Handle: RePEc:unm:unumer:2016067