The Federal Reserve’s Quantitative Easing - Promises and Outcomes in the Wake of the Great Recession

This study focuses on the Federal Reserve’s policy of quantitative easing which was implemented in response to the financial crisis of 2007-8 and the subsequent Great Recession. The policy was intended to stimulate investment, fight deflation and boost household and business net worth to achieve the mandated aims of low unemploy-ment and low, stable inflation. The policy involves trillions of dollars of liquidity gen-erated and distributed by the Federal Reserve via purchases of Treasury securities, mortgage-backed securities and agency debt. This analysis of QE presents a critical review of existing theoretical and empirical literature and an exploratory data analysis in an attempt to answer the question of whether the Fed achieved its aims with the policy and what other impacts it may have had on the U.S. economy. The findings show that QE, despite being useful to calm initial market panic, did not have a strong impact on the real economy and is not a sus-tainable solution to bring the U.S. economy to stability and growth.