Document Type
Article
Publication Date
2015
Publication Title
Review of Economic Analysis
Volume
7
Issue
2
Pages
135-156
Abstract
The Financial Crisis of 2007-09 caused the U.S. economy to experience a relatively long recession from December 2007 to June 2009. Both the U.S. government and the Federal Reserve undertook expansive fiscal and monetary policies to minimize both the severity and length of the recession. Most notably, the Federal Reserve initiated three rounds of unconventional monetary policies known as Quantitative Easing. 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 the stock market and thus the wealth of consumers. This paper investigates this hypothesis and concludes that quantitative easing has contributed to the observed increases in the stock market’s significant recovery since its crash due to the financial crisis.
Recommended Citation
Malliaris, Anastasios G.; Malliaris, Mary; and Bhar, Ramaprasad. Quantitative Easing and the U.S. Stock Market: A Decision Tree Analysis. Review of Economic Analysis, 7, 2: 135-156, 2015. Retrieved from Loyola eCommons, School of Business: Faculty Publications and Other Works,
Creative Commons License
This work is licensed under a Creative Commons Attribution-Noncommercial-No Derivative Works 3.0 License.
Copyright Statement
© Malliaris, A., M.E. Malliaris, and R. Bhar 2015
Comments
Author Posting. © Malliaris, A., M.E. Malliaris, and R. Bhar 2015. This article is posted here by permission of the Rimini Centre for Economic Analysis for personal use, not for redistribution. The article was published in the Review of Economic Analysis, vol. 7, no. 2, 2015, http://rofea.org/index.php?journal=journal&page=article&op=view&path%5B%5D=246