Subsequently, with financial markets having calmed down to some extent, central banks continued with large-scale asset purchases with the aim of stabilizing the macroeconomy and avoiding deflation by pushing down various premiums in financial markets. Furthermore, another important component of QQE, as mentioned earlier, was to raise inflation expectations by influencing forward-looking expectations formation.
A number of studies employing New Keynesian models – the standard type of macroeconomic models employed to analyze monetary policy issues – have sought to incorporate various kinds of financial market imperfections to examine the impact of such quantitative easing. 6 However, I think that to date it is not sufficiently clear under what circumstances and through which mechanisms quantitative easing is effective.