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The effectiveness of large-scale asset purchases

October 16, 2018 Bilal 0

The effectiveness of large-scale asset purchases https://ift.tt/2Eeb89V Central banks in the US, Europe, and Japan purchased many trillions of dollars of assets in an effort to hold down their interest rates and stimulate their economies. The Fed described these operations as ‘large-scale asset purchases’, and they were often referred to in the business press as ‘quantitative easing’ (QE). In the US, asset purchases were implemented in three phases between 2009 and 2014, commonly labelled QE1, QE2, and QE3. What did these purchases accomplish? Figure 1 Federal Reserve holdings of securities, 19 November 2008 to 27 December 2017 Notes: Sum of Federal […]

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A Survey of the Empirical Literature on U.S. Unconventional Monetary Policy (2016)

September 2, 2018 Bilal 0

https://s3.amazonaws.com/real.stlouisfed.org/wp/2016/2016-021.pdf Abstract: This paper reviews and critically evaluates the empirical literature on the effects of U.S. unconventional monetary policy on both financial markets and the real economy. In order to understand how such policies could work, we also briefly review the literature on the theory of such policies. We show that event studies provide very strong evidence that U.S. unconventional policy announcements have strongly influenced international bond yields, exchange rates, and equity prices in the desired manner. In addition, such studies indicate that such policies curtailed market perceptions of extreme events. Calibrated modeling and vector autoregressive (VAR) exercises strongly suggest […]

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FEDS 2018-056: A Shadow Rate or a Quadratic Policy Rule? The Best Way to Enforce the Zero Lower Bound in the United States

September 2, 2018 Bilal 0

FEDS 2018-056: A Shadow Rate or a Quadratic Policy Rule? The Best Way to Enforce the Zero Lower Bound in the United States https://ift.tt/2w4DA6S FEDS 2018-062 August 2018 Abstract: The Phillips curve has been much flatter in the past twenty years than in the preceding decades. We consider two hypotheses. One is that prices at the microeconomic level are stickier than they used to be—in the context of the canonical Calvo model, firms are adjusting prices less often. The other is that the expectations of firms and households about future inflation are now less well informed by macroeconomic conditions; because […]