Lesson+19+Large+Scale+Asset+Purchases+_LSAPs_

Lesson+19+Large+Scale+Asset+Purchases+_LSAPs_ - Lesson 19...

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Lesson 19 Large Scale Asset Purchases (LSAPs)/Quantitative Easing The Federal Reserve's Asset Purchase Program, Janet Yellen, January 8, 2011 http://www.federalreserve.gov/newsevents/speech/yellen20110108a.pdf Implementing the Federal Reserve's Asset Purchase Program, Brian Sack, February 9, 2011 http://www.newyorkfed.org/newsevents/speeches/2011/sac110209.html
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Ben Bernanke Rebalancing the Global Recovery November 19, 2010 http://www.federalreserve.gov/newsevents/speech/ bernanke20101119a.htm Incidentally, in my view, the use of the term "quantitative easing" to refer to the Federal Reserve's policies is inappropriate . Quantitative easing typically refers to policies that seek to have effects by changing the quantity of bank reserves, a channel which seems relatively weak, at least in the U.S. context. In contrast, securities purchases work by affecting the yields on the acquired securities and, via substitution effects in investors' portfolios, on a wider range of assets.
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Subtle Difference Between Traditional Quantitative Easing and What the Fed Has Done Quantitative Easing is the targeted expansion of Fed liabilities specifically bank reserves or the monetary base with the intention of influencing money and credit growth. In contrast, the LSAP problem was aimed at the asset side of the Fed’s balance sheet with the intention of lowering longer term interest rates, and private sector borrowing costs.
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Usage of the expression Quantitative Easing (QE) QE or QEII has gained favor in on Wall Street, in the media, and has been embraced by monetarists, although not technically accurate The QE expression is now being used to mean an expansion of the Fed’s security holdings.
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This note was uploaded on 03/23/2011 for the course ECONOMICS 220 taught by Professor Clare during the Spring '08 term at Rutgers.

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Lesson+19+Large+Scale+Asset+Purchases+_LSAPs_ - Lesson 19...

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