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Employment effects of unconventional monetary policy: Evidence from QE

Stephan Luck and Tom Zimmermann

Journal of Financial Economics, 2020, vol. 135, issue 3, 678-703

Abstract: This paper investigates employment effects of the Federal Reserve’s quantitative easing policies (QE) via a bank lending channel. We find that banks with higher mortgage-backed securities holdings refinanced relatively more mortgages after the first round of QE, which increased local consumption and employment in the nontradable goods sector. In contrast, banks increased lending to firms and home purchase mortgage origination after the third round of QE, which led to a sizable increase in overall employment. Our findings are supported by new confidential loan-level data that show firms with stronger ties to affected banks increased employment and capital investment more during QE3.

Keywords: Bank lending channel; Quantitative easing (search for similar items in EconPapers)
JEL-codes: D25 E5 E52 G01 G21 (search for similar items in EconPapers)
Date: 2020
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Working Paper: Employment Effects of Unconventional Monetary Policy: Evidence from QE (2018) Downloads
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DOI: 10.1016/j.jfineco.2019.07.004

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