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Operation Twist and the effect of large-scale asset purchases

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  • Titan Alon
  • Eric Swanson

Abstract

The Federal Reserve's current large-scale asset purchase program, dubbed "QE2," has a precedent in a 1961 initiative by the Kennedy Administration and the Federal Reserve known as "Operation Twist." An analysis finds that four of six potentially market-moving Operation Twist announcements had statistically significant effects and that the program cumulatively caused a significant but moderate 0.15 percentage point reduction in longer-term Treasury yields. These results can be used to estimate QE2's effects.

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Bibliographic Info

Article provided by Federal Reserve Bank of San Francisco in its journal FRBSF Economic Letter.

Volume (Year): (2011)
Issue (Month): apr25 ()
Pages:

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Handle: RePEc:fip:fedfel:y:2011:i:apr25:n:2011-13

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Keywords: Monetary policy ; Interest rates;

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Cited by:
  1. Kazumasa Iwata & Shinji Takenaka, 2012. "Central bank balance sheet expansion: Japan's experience," BIS Papers chapters, in: Bank for International Settlements (ed.), Are central bank balance sheets in Asia too large?, volume 66, pages 132-159 Bank for International Settlements.
  2. Ellis W. Tallman & Saeed Zaman, 2012. "Where would the federal funds rate be, if it could be negative?," Economic Commentary, Federal Reserve Bank of Cleveland, issue Oct.

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