Marcel Fratzscher Speaks at ZEW Research Seminar

Dr. Marcel Fratzscher addressed a controversial issue that is currently fuelling worldwide political debate at the ZEW Research Seminar: he discussed the results of a study on the global impact of the monetary policy measures by the American Central Bank Federal Reserve (Fed).

He examined the impact of the American Central Bank’s monetary policy on other countries in the period from 2008 to mid-2011. According to Fratzscher, the Fed’s monetary policy had pro-cyclical effects on the capital flows in emerging market economies and anti-cyclical effects on the United States. As he puts it, this period was moreover marked by two phases of quantitative easing (QE1 and QE2) which were particularly characterised by the purchase of government bonds.

Furthermore, Fratzscher distinguished the impact of the Fed’s monetary policy announcements from the impact of its actual operations. "Fed operations, such as the purchase of government bonds or of mortgage-backed securities, had significantly stronger effects on portfolio allocation and on asset prices than the mere announcements", says Fratzscher.

Dr. Marcel Fratzscher is the currenthead of the International Policy AnalysisDivision of the European Central Bank(ECB). In September 2012, he was elected Chief Executive Officer by the board of trustees at the German Institute of Economic Research (DIW). He is expected to take up his position at DIW in February 2013.