Economists in Jackson Hole Say QE Less Potent Than Fed Believes
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The U.S. central bank’s bond buying is a less potent tool for stimulating growth than policy makers believe, two economists said in a paper released today at a Federal Reserve conference.
The paper scrutinizes the stance of some Fed officials that so-called quantitative easing works through a “portfolio-balance channel” in which Fed asset purchases induce investors to rebalance their investments to boost a wide range of financial assets. The research was presented at an annual Kansas City Fed symposium in Jackson Hole, Wyoming.