Richard Grossman, professor of economics, is featured in a radio interview with Share Radio in London Feb. 19.
In the interview, Grossman talks about the consequences of the European Central Bank’s new quantitative easing (QE) policy, which may stimulate an economy when a standard monetary policy has become ineffective.
The ECB’s action follows in the footsteps of the central banks of Japan, the United Kingdom, and the United States, which also have used quantitative easing in the 2000s.
A concern that has been raised about the introduction of QE is that persistent low interest rates will lead to another boom-bust macroeconomic cycle similar to the one that ended in the US subprime crisis. Grossman, who conducts research on historical episodes of financial crises, argues that the European economy is so weak at the moment that the risk of QE causing a crisis is low, and certainly outweighed by the benefits.
Grossman said implementation of the QE may not be noticed right away.
“Over time, this will put a consistent downward pressure on the euro,” which Grossman argues will help European exporters.
Listen to the program here.