Is the Fed’s policy of quantitative easing effective?
This question is particularly relevant as the Federal Reserve meets September 17-18 to discuss tapering of its large scale asset purchase program. That conversation has caused markets to convulse this summer.
We conclude that, while current Fed actions may be politically necessary to improve the depressed state of economic conditions, quantitative easing by itself has had little effect on economic output.
How stimulative are large asset purchases? “The Federal Reserve’s large-scale purchases of long-term Treasury securities (quantitative easing) most likely provided a modest