Quantitative easing in a monetary union

The long season of unconventional monetary policies in advanced economiesseems to be coming to an end. How can quantitative easing (QE) be effective whereconventional monetary policy fails? How does it work in the peculiar environment ofa monetary union? We study this latter case modelling a monetary union as theaggregate of two countries characterized by New Keynesian output and inflationrelationships, with a Tobinian money market equation. QE is operated by the singlecentral bank by expanding money supply in exchange for risky assets throughoutthe union. We assess the stabilization capacity of QE under different types of symmetric and asymmetric shocks, in which case fiscal accommodation at the countrylevel should also intervene.