A Quantitative Easing Experiment
Adrian Penalver (),
Nobuyuki Hanaki (),
Yukihiko Funaki () and
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Eizo Akiyama: University of Tsukuba, Japan
No 2018-10, GREDEG Working Papers from Groupe de REcherche en Droit, Economie, Gestion (GREDEG CNRS), Université Côte d'Azur, France
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 substitute for cash, and have a constant fundamental value (FV) which is not affected by QE in the rational expectations equilibrium. We found that QE raised the bond prices beyond those in the benchmark treatment without QE and these differences became larger as subjects gained experience. While subjects in the benchmark treatment learned to trade the bonds at its FV, those in treatments with QE became more convinced that QE boosts bond prices.
Keywords: Quantitative easing; experimental asset market; expectation dynamics JEL Code: C90; D84 (search for similar items in EconPapers)
JEL-codes: C90 D84 (search for similar items in EconPapers)
Pages: 51 pages
New Economics Papers: this item is included in nep-cba, nep-exp and nep-mon
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http://www.gredeg.cnrs.fr/working-papers/GREDEG-WP-2018-10.pdf First version (application/pdf)
Journal Article: A quantitative easing experiment (2020)
Working Paper: A quantitative easing experiment (2020)
Working Paper: A Quantitative Easing Experiment (2017)
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Persistent link: https://EconPapers.repec.org/RePEc:gre:wpaper:2018-10
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