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- Title
The Macroeconomic Effects of Large-scale Asset Purchase Programmes* .
- Authors
Chen, Han; Cúrdia, Vasco; Ferrero, Andrea
- Abstract
We simulate the Federal Reserve second Large-Scale Asset Purchase programme in a DSGE model with bond market segmentation estimated on US data. GDP growth increases by less than a third of a percentage point and inflation barely changes relative to the absence of intervention. The key reasons behind our findings are small estimates for both the elasticity of the risk premium to the quantity of long-term debt and the degree of financial market segmentation. Without the commitment to keep the nominal interest rate at its lower bound for an extended period, the effects of asset purchase programmes would be even smaller.
- Subjects
UNITED States; QUANTITATIVE easing (Monetary policy); BANK reserves; FEDERAL Reserve banks; CENTRAL banking industry; FEDERAL Reserve monetary policy; INTEREST rates; BANK assets; UNITED States economy, 2001-2009; UNITED States economic policy; UNITED States politics &; government, 2001-2009
- Publication
Economic Journal, 2012, Vol 122, Issue 564, pF289
- ISSN
0013-0133
- Publication type
Article
- DOI
10.1111/j.1468-0297.2012.02549.x