Operation Twist and the effect of large-scale asset purchases

Titan Alon and Eric Swanson

FRBSF Economic Letter, 2011, issue apr25

Abstract: The Federal Reserve's current large-scale asset purchase program, dubbed \\"QE2,\\" has a precedent in a 1961 initiative by the Kennedy Administration and the Federal Reserve known as \\"Operation Twist.\\" An analysis finds that four of six potentially market-moving Operation Twist announcements had statistically significant effects and that the program cumulatively caused a significant but moderate 0.15 percentage point reduction in longer-term Treasury yields. These results can be used to estimate QE2's effects.

Keywords: Monetary policy; Interest rates (search for similar items in EconPapers)
Date: 2011
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