(2019), “  A tale of two decades: the ECB’s monetary policy at 20”, Working Paper Series, No 2346, European Central Bank), the NAWM-II model, and the ECB-BASE model. These estimates of the macroeconomic impact of our measures are probably a conservative quantification of the effectiveness of our policy package. In particular, these calculations do not capture the benefit of preventing adverse non-linear dynamics.
In other words, the impact of a given change in financial conditions in reality depends on the state of the economy: under acute financial market stress, the presence of financial frictions and balance sheet constraints implies severe non-linearities that translate into much larger contractionary effects brought on by a tightening of financial conditions.