Assessing the Economy-wide Effects of Quantitative Easing


  • Corresponding author: Ibrahim Stevens, Deutsche Gesellschaft für Internationale Zusammenarbeit (GIZ), GIZ Office Rwanda, P.O. Box 59 Kigali, Rwanda. Email:

  • The views expressed in this article are those of the authors and not necessarily those of the Bank of England. The authors thank Mark Astley, Ryan Banerjee, Jagjit Chadha, Spencer Dale, Stefania D'Amico, Rodrigo Guimaraes, Mike Joyce, Michele Lenza, Lea Paterson, Hashem Pesaran, Simon Price, Ron Smith, Ryland Thomas, Matthew Tong, Oreste Tristani, Robert Woods, Tony Yates, Chris Yeates, Chris Young and an anonymous referee for useful comments on a previous draft. We also thank Ahila Karan and Lydia Silver for research assistance.


This article examines the macroeconomic impact of the first round of quantitative easing (QE) by the Bank of England. We attempt to quantify the effects of these purchases by focusing on the impact of lower long-term interest rates on the wider economy. We use three different models to estimate the impact of QE on output and inflation: a large Bayesian vector autoregression (VAR), a change-point structural VAR and a time-varying parameter VAR. Our estimates suggest that QE may have had a peak effect on the level of real GDP of around inline image and a peak effect on annual CPI inflation of about inline image% points.