The Transmission Channels of Quantitative Easing: Evidence from the Cross-section of Bond Prices and Issuance
Stefano Pegoraro, Joint Program in Financial Economics PhD student
Following the 2008 financial crisis, central banks in advanced economies implemented a series of large-scale asset purchase programs, often referred to as quantitative easing programs, with the intent of boosting economic activity and inflation. However, surprisingly little is known about the effects of such programs on real economic outcomes. In this paper, we provide empirical evidence about the impact of quantitative easing on security markets and firms' financing and economic activity. In particular, we consider the corporate bond purchase program of the European Central Bank and we exploit the heterogeneity of European non-financial issuers in order to disentangle the channels through which quantitative easing operates. With our work, we hope to provide policy-makers with the empirical evidence that is needed in order to design and evaluate current and future policies.