A0212
Title: On the effectiveness of quantitative easing in the US
Authors: Nektarios Michail - Central Bank of Cyprus (Cyprus) [presenting]
Abstract: The transmission channels through which asset purchases are supposed to affect the economy are examined using US data in a Bayesian VAR setup. After distinguishing between GDP components, to account for the increase in government spending during the quantitative easing (QE) period, the results offer only weak support for the existence of a portfolio rebalancing channel. No support is found for the uncertainty or expectations channels. Overall, asset purchases appear to have had some impact on funding conditions, but little (if any) impact on the real economy. Hence, QE is more relevant in its interplay with fiscal policies, notably because it lowers the cost of debt.
