ECB Unconventional Monetary Policy and the Italian Economy during the Sovereign Debt Crisis

We assess the impact of the main unconventional monetary measures adopted by the European Central Bank in 2011-12 (the Securities Markets Programme, the three-year longer-term refinancing operations, and the Outright Monetary Transactions) on the Italian economy. We first estimate the indirect effects on financial and credit markets and then we map them onto their macroeconomic implications. The results suggest that all operations have, to varying degrees, contributed to counteract the increase in government bond yields and to improve credit supply and money-market conditions. From a macroeconomic perspective, the measures have had a large positive effect, mainly through the credit channel, with a cumulative impact on GDP growth of 2.7 percentage points over the period 2012-13.