Requirement for the cases:

Refer to the Syllabus for requirements for the cases, to include length of paper (2 pages max), meeting deadlines, compliance with academic integrity rules.

Note: Each response should reflect the question number you are answering.

It is requested that the assignment be submitted via email.

Case 2: Quantitative Easing in the Great Recession

The case utilizes an event study methodology to identify effects of quantitative easing (QE) on the economy.

Assignment Questions: Using the information in the case, answer the questions below.

1. In analyzing the economic and financial market impacts of the QE announcements, what are the probable reasons for the changes in behavior of:

olong-term and short-term rates,

ocredit default swaps, and

oinflation expectations.

Hint: This question is asking for reasons, not a summary of the changes in the Tables. For example, 10 year Treasury yields declined 107 basis points in QE1. Why?

2. Choose one sector of the economy and describe how QE may stimulate that sector. Examples of sectors:households, banks, corporations, etc.

3. The case reflects statements from several Federal Reserve and other officials regarding potential risks (costs) of QE. Choose one of these risks and describe why you do or do not think it was a potential risk.