Publication
Did the period of low interest rates undermine the European Central Bank's ability to effectively lower inflation in the post-COVID-19 economic environment?
| datacite.subject.fos | Ciências Sociais::Economia e Gestão | |
| datacite.subject.sdg | 08:Trabalho Digno e Crescimento Económico | |
| datacite.subject.sdg | 16:Paz, Justiça e Instituições Eficazes | |
| datacite.subject.sdg | 10:Reduzir as Desigualdades | |
| dc.contributor.advisor | Ilseven, Ekin | |
| dc.contributor.author | Born, Clemens Anton Christoph | |
| dc.date.accessioned | 2025-08-05T14:09:42Z | |
| dc.date.available | 2025-08-05T14:09:42Z | |
| dc.date.issued | 2025-04-29 | |
| dc.date.submitted | 2025-03-13 | |
| dc.description.abstract | The thesis, "Did the period of low interest rates undermine the European Central Bank’s ability to effectively lower inflation in the post-Covid-19 economic environment" by Clemens Born, analyses how a low-interest-rate environment affected the ECB’s ability to combat inflation. In a normal fiscal environment, the central bank controls inflation through key interest rates and transmission mechanisms, which can lose effectiveness in an expansive monetary environment. While traditional monetary theory suggests a negative relationship between interest rates, lending, and inflation, empirical observations from the pre-pandemic period indicate a contrarian effect. This study examines how prolonged low interest rates and quantitative easing (QE) impacted inflation dynamics in the euro area. Using Ordinary Least Squares (OLS) regressions and Ttests, it assesses monetary transmission before and after the Covid-19 pandemic. The results suggest that excess reserves, rather than supporting credit creation, contributed to inflationary pressures once economic activity resumed. Moreover, interest rate hikes failed to curb inflation effectively in an ultra-loose monetary environment. By examining these dynamics, this thesis contributes to the debate on monetary policy effectiveness by empirically testing whether the ECB’s ability to control inflation was constrained. Unlike previous studies, it considers COVID-19 as a catalyst for inflation, as economic disruptions and fiscal and monetary interventions accelerated price dynamics. The findings suggest that excess liquidity entered the real economy through the credit channel, fueling inflation despite rising interest rates. Consequently, the ECB’s ability to manage inflation post-pandemic was limited, raising concerns about the long-term effectiveness of conventional monetary policy. | eng |
| dc.description.abstract | A tese, "O período de taxas de juros baixas enfraqueceu a capacidade do Banco Central Europeu de reduzir efetivamente a inflação no ambiente econômico pós-Covid-19?", de Clemens Born, analisa o impacto de juros baixos na capacidade do BCE de controlar a inflação. Normalmente, o banco central usa taxas de juros e canais de transmissão, mas esses mecanismos podem perder eficácia em um ambiente de liquidez excessiva. Embora a teoria monetária tradicional sugira uma relação negativa entre juros, crédito e inflação, evidências do período pré-pandemia indicam um efeito contrário. Este estudo examina como taxas de juros baixas prolongadas e o afrouxamento quantitativo (QE) afetaram a inflação na zona do euro. Usando regressões OLS e testes T, avalia a transmissão monetária antes e depois da pandemia. Os resultados mostram que reservas excessivas, em vez de impulsionar o crédito, contribuíram para pressões inflacionárias quando a economia se recuperou. Além disso, aumentos nas taxas de juros não contiveram a inflação em um ambiente monetário expansionista. A tese contribui ao debate sobre política monetária ao testar se a capacidade do BCE de controlar a inflação foi comprometida. Diferente de estudos anteriores, considera a Covid-19 um catalisador da inflação, intensificada por estímulos fiscais e monetários. Os achados indicam que a liquidez excessiva entrou na economia real via crédito, impulsionando a inflação, apesar do aperto monetário. Isso levanta dúvidas sobre a eficácia da política monetária convencional no longo prazo. | por |
| dc.identifier.tid | 203941667 | |
| dc.identifier.uri | http://hdl.handle.net/10400.14/54168 | |
| dc.language.iso | eng | |
| dc.rights.uri | N/A | |
| dc.subject | Banco Central Europeu | |
| dc.subject | Economia | |
| dc.subject | Economics | |
| dc.subject | European Central Bank | |
| dc.subject | Excess reserves | |
| dc.subject | Inflação | |
| dc.subject | Inflation | |
| dc.subject | Interest rate | |
| dc.subject | Monetary transmission | |
| dc.subject | Multiple regression | |
| dc.subject | Regressão múltipla | |
| dc.subject | Reservas em excesso | |
| dc.subject | Taxa de juro | |
| dc.subject | Transmissão monetária | |
| dc.title | Did the period of low interest rates undermine the European Central Bank's ability to effectively lower inflation in the post-COVID-19 economic environment? | eng |
| dc.type | master thesis | |
| dspace.entity.type | Publication | |
| thesis.degree.name | Mestrado em Gestão e Administração de Empresas |
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