Economics at your fingertips  

A quantitative easing experiment

Adrian Penalver (), Nobuyuki Hanaki (), Eizo Akiyama, Yukihiko Funaki () and Ryuichiro Ishikawa

Journal of Economic Dynamics and Control, 2020, vol. 119, issue C

Abstract: We experimentally investigate the effect of a central bank buying bonds for cash in a quantitative easing (QE) operation. In our experiment, the bonds are perfect substitutes for cash and have a constant fundamental value which is not affected by QE in the rational expectations equilibrium. We find that QE raises bond prices above those in the benchmark treatment without QE. Subjects in the benchmark treatment learned to trade the bonds at their fundamental value but those in treatments with QE became more convinced after repeated exposure to the same treatment that QE boosts bond prices. This suggests the possibility of a behavioural channel for the observed effects of actual QE operations on bond yields.

Keywords: Quantitative easing; Experimental asset market; Expectation dynamics (search for similar items in EconPapers)
JEL-codes: C90 D84 (search for similar items in EconPapers)
Date: 2020
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (3) Track citations by RSS feed

Downloads: (external link)
Full text for ScienceDirect subscribers only

Related works:
Working Paper: A quantitative easing experiment (2020) Downloads
Working Paper: A Quantitative Easing Experiment (2018) Downloads
Working Paper: A Quantitative Easing Experiment (2017) Downloads
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link:

DOI: 10.1016/j.jedc.2020.103978

Access Statistics for this article

Journal of Economic Dynamics and Control is currently edited by J. Bullard, C. Chiarella, H. Dawid, C. H. Hommes, P. Klein and C. Otrok

More articles in Journal of Economic Dynamics and Control from Elsevier
Bibliographic data for series maintained by Catherine Liu ().

Page updated 2022-06-07
Handle: RePEc:eee:dyncon:v:119:y:2020:i:c:s0165188920301469