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A Quantitative Easing Experiment

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

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 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
Date: 2018-04
New Economics Papers: this item is included in nep-cba, nep-exp and nep-mon
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Related works:
Journal Article: A quantitative easing experiment (2020) Downloads
Working Paper: A quantitative easing experiment (2020) Downloads
Working Paper: A Quantitative Easing Experiment (2017) Downloads
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Persistent link: https://EconPapers.repec.org/RePEc:gre:wpaper:2018-10

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