Stricter bank rules boost economy stability over unconventional monetary policies.
The study looked at how unconventional monetary policies like quantitative easing and qualitative easing, along with stricter bank regulations, affect the economy. Quantitative easing helps reduce losses in GDP and consumption after a financial shock but leads to high fluctuations in inflation and GDP. On the other hand, qualitative easing has a smaller impact on GDP and consumption but doesn't increase inflation and GDP volatility as much. When combined with stricter bank regulations, qualitative easing becomes more effective in reducing losses in GDP and consumption, while quantitative easing becomes less effective. Stricter bank regulations also help decrease the volatility of inflation and GDP caused by quantitative measures.