Comparative Analysis and Impact of Conventional and Non-Conventional Monetary Policies on USA and Japan’s GDP Growth Rate During Financial Crises

Abstract

This article talks about how central banks step up and take measures to keep economy at bay by using fiscal and monetary policy measures. We here examine the effects of conventional monetary policy measures when the economy goes for a toss and also measure the effectiveness of it on economy. The article also talks about the non-conventional monetary policy measures like Quantitative Easing which is being used when conventional measures like interest rates fail to work. We compare the effect of both the measures and see the effectiveness in revival of the economy. The unconventional monetary policy measures were only taken in the developed countries like Japan, UK, USA etc. Prior research suggests that these measures have helped the economies to come out of the crisis. This paper has the examples of Japan and USA in this paper. The reason being, that Japan was the first country to implement Quantitative Easing, so we will have a broader timeline to understand the effects of QE on the growth rate of the country. USA is also taken into consideration because the world relies on the US dollars and if there’s a change in US dollar, the effects could be felt all around the globe. So, to understand the effects of QE more effectively, the USA is taken into account.