FRBSF Economic Letter: Estimating the Macroeconomic Effects of the Fed's Asset Purchases
Hess Chung, Jean-Philippe Laforte, David Reifschneider, and John C. Williams:
FRBSF Economic Letter: Estimating the Macroeconomic Effects of the Fed's Asset Purchases (2011-03, 1/31/2011): An analysis shows that the Federal Reserve's large-scale asset purchases have been effective at reducing the economic costs of the zero lower bound on interest rates. Model simulations indicate that, by 2012, the past and projected expansion of the Fed's securities holdings since late 2008 will lower the unemployment rate by 1½ percentage points relative to what it would have been absent the purchases. The asset purchases also have probably prevented the U.S. economy from falling into deflation.
