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Date of Graduation
Bachelor of Science (BS)
Department of Economics
S. Kirk Elwood
The 2008 recession affected the American economy more than any recession since the Great Depression. Unlike its response to the Great Depression, the Federal Reserve aimed to stimulate the economy through all means in its power. However, the Federal Reserve’s conventional monetary policy tools were not viable options due to the zero lower bound. As a result, the Federal Reserve pursued an unconventional monetary policy tool known as quantitative easing which involved purchases of long-term assets on a scale never before seen in the United States. Since its inception, quantitative easing has faced significant scrutiny over its merit and has been the focus of research that has resulted in conclusions ranging from a complete failure to a resounding success. This paper focuses on quantitative easing’s effect on the macroeconomy and finds that although quantitative easing was effective in increasing inflation and lowering rates on long-term Treasuries and mortgages, there was a negative effect on real economic activity, casting doubt on how effective these programs were on stimulating the economy as a whole.
Walker, Seth T., "Evaluating the effectiveness of quantitative easing: An SVAR approach" (2020). Senior Honors Projects, 2020-current. 11.