The macroeconomic effects of large-scale asset purchase programs

Han Chen (), Vasco Cúrdia and Andrea Ferrero

No 2012-22, Working Paper Series from Federal Reserve Bank of San Francisco

Abstract: We simulate the Federal Reserve second Large-Scale Asset Purchase program in a DSGE model with bond market segmentation estimated on U.S. 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. Absent the commitment to keep the nominal interest rate at its lower bound for an extended period, the effects of asset purchase programs would be even smaller.

Keywords: Open market operations; Monetary policy (search for similar items in EconPapers)
Pages: 46 pages
Date: 2012-10-24
New Economics Papers: this item is included in nep-dge, nep-mac and nep-mon
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Citations: View citations in EconPapers (257)

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Related works:
Journal Article: The Macroeconomic Effects of Large‐scale Asset Purchase Programmes (2012)
Working Paper: The Macroeconomic Effects of Large-Scale Asset Purchase Programs (2012)
Working Paper: The macroeconomic effects of large-scale asset purchase programs (2011)
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