Revisiting The Only Thing That Matters In A Taper: Stock Vs. Flow Effects

With the ECB decision in the books, it's worth briefly revisiting the QE "stock" versus "flow" debate. Although you can add specificity and fancy language if you like, it boils down to a very simple question: is it the cumulative size of central bank balance sheets that matters (the stock effect) or is it the pace of the ongoing purchases (the flow effect) that's important? As a reminder, no one knows the answer to that yet. That's how it works with things that are "unprecedented" like the