Business Commons^™

The Impact Of Large-Scale Asset Purchases On The S&P 500 Index, Long-Term Interest Rates And Unemployment, Anastasios G. Malliaris, Ramaprasad Bhar

School of Business: Faculty Publications and Other Works

After the bankruptcy of Lehman Brothers in September 2008 and the financial panic that ensued, the Federal Reserve moved rapidly to reduce the federal funds rate to .25%. It was quickly judged that additional measures were needed to stabilize the US economy. Beginning in December 2008, the Federal Reserve Bank initiated three rounds of unconventional monetary policies known as quantitative easing (QE). These policies were intended to reduce long-term interest rates when the short-term federal funds rates had reached the zero lower bound and could not become negative. It was argued that the lowering of longer-term interest rates would help …