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Working Paper
Open-Ended Treasury Purchases: From Market Functioning to Financial Easing
We exploit the Fed’s Treasury purchases conducted from March 2020 to March 2022 to assess whether asset purchases can be tailored to accomplish different objectives: restoring market functioning and providing stimulus. We find that, on average, flow effects are significant in the market-functioning (MF) period (March-September 2020), while stock effects are strong in the QE period (September 2020-March 2022). In the MF period, the elevated frequency and size of the purchase operations allowed flow effects to greatly improve relative price deviations, especially at the long-end of the yield ...
What Does the NFCI Tell Us About Future Economic Growth?
The Federal Reserve’s policy tools rely on financial markets to transmit changes in monetary policy to the real economy. For instance, changes in short-term interest rates set by the Fed and faced by financial institutions—e.g., the federal funds rate—affect longer-term rates paid by firms and households. These rate changes in turn impact borrowing and spending decisions. Understanding the current state of financial conditions is, thus, both critical to central bankers and of interest to the wider public.
Newsletter
Higher Home Prices and Higher Rates Mean Bigger Affordability Hurdles for the U.S. Consumer
In the U.S., homeownership is often described as part of the “American dream,” a way for consumers to accumulate wealth and gain other economic benefits. Almost two out of three U.S. households own the home they live in, a relatively stable amount over the last decade. Buying a home is usually the largest investment that a consumer will make, and the purchase price usually far exceeds what most can afford out of their current savings. In 2022, roughly 70% of home purchases were made with the help of mortgage financing.