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How might the Fed's large-scale asset purchases lower long-term interest rates?

Renee Courtois Haltom and Juan Hatchondo

Richmond Fed Economic Brief, 2011, issue Jan, No 11-1

Abstract: Over the past two years the Federal Reserve has engaged in large-scale asset purchases (LSAPs), often grouped under the heading of "quantitative easing," as an alternative means of stimulating the economy when policy rates are at their zero lower bound. Theoretical and empirical research shows how this policy may lower long-term interest rates, and financial market data suggest that the initial launch of LSAPs had an effect on expectations about future Fed policy.

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