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How Much Effect Does Qe Have On Gdp?


Dylan
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Maybe a silly question, but would the GDP figures have been a lot worse without QE?

certainly the government would have been able to spend less were it not for QE; there is a ready buyer for the debt the government issues (the BofE)... and as GDP includes (from Wikipedia):

GDP= private consumption + gross investment + government spending + (exports - imports)

then yes, the impact on GDP damage from a decline in private consumption (due to consumer demise) is being limited by increased government spending.

Edited by chris c-t
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Well all the evidence is that the QE money isn't really being passed on to borrowers by the banks. So very little on that score.

OTOH banks are 20% of our GDP in their own right, so even if they p*ss it all away on the FTSE and down the book makers perhaps it will still have some kind of impact.

What it won't do IMHO is repair bank balance sheets because it's not a permanent transfer of money. To do that you'd have to give them the money directly. But it would (agin IMHO) stop them collapasing.

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