Bernanke Secret Sauce Drops Fed Rate as QE Quantified: Economy
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Five years into the era of quantitative easing pioneered by departing Federal Reserve Chairman Ben S. Bernanke, two economists say they’ve measured how much extra stimulus the bond purchases provide when the main interest rate is already near zero.
The economists, Jing Cynthia Wu and Fan Dora Xia, used a concept known as the “shadow rate” to gauge the impact of quantitative easing and the Fed’s forward guidance on the likely path of interest rates.