Large-scale asset purchases by the Federal Reserve: did they work?

Gagnon, Joseph E.; Raskin, Matthew; Remache, Julie; Sack, Brian P.

Journal Article

Large-scale asset purchases by the Federal Reserve: did they work?

Abstract: In this study, authors Joseph Gagnon, Matthew Raskin, Julie Remache and Brian Sack review the Federal Reserve?s experience with implementing the LSAPs between late 2008 and March 2010. They explain that the target fed funds rate was set as low as possible in December 2008. Thus, to further ease the stance of monetary policy as the economic outlook deteriorated, the central bank purchased substantial quantities of assets with medium and long maturities?housing agency debt, agency mortgage-backed securities (MBS) and Treasuries?to drive down private borrowing rates. ; Title of Special Issue: Federal Reserve Policy Responses to the Financial Crisis.

Keywords: Federal Open Market Committee; Treasury bonds; Portfolio management; Open market operations; Liquidity (Economics); Mortgage-backed securities; time series analysis; Investments; Risk; Federal Reserve System; Interest rates; Federal Reserve Bank of New York;