Author(s):
Silva, Alexandre Marques Correia da
Date: 2015
Persistent ID: http://hdl.handle.net/10362/15566
Origin: Repositório Institucional da UNL
Subject(s): Counterfactual; Policy effectiveness; Quantitative easing; Zero lower bound; Domínio/Área Científica::Ciências Sociais::Economia e Gestão
Description
The catastrophic disruption in the USA financial system in the wake of the financial crisis prompted the Federal Reserve to launch a Quantitative Easing (QE) programme in late 2008. In line with Pesaran and Smith (2014), I use a policy effectiveness test to assess whether this massive asset purchase programme was effective in stimulating the economic activity in the USA. Specifically, I employ an Autoregressive Distributed Lag Model (ARDL), in order to obtain a counterfactual for the USA real GDP growth rate. Using data from 1983Q1 to 2009Q4, the results show that the beneficial effects of QE appear to be weak and rather short-lived. The null hypothesis of policy ineffectiveness is not rejected, which suggests that QE did not have a meaningful impact on output growth.