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I. Introduction
Bytheendof2008,theFederalReserve’sconventionalmonetarypolicytool,thefederalfundsrate,was
atitseffectivelowerboundastheeconomywasinthemidstofafinancialcrisisanddeeprecession.In
thesecircumstances,theFederalOpenMarketCommittee
(FOMC)turnedtotwounconventionalpolicy
tools—quantitativeeasingprogramsandincreasinglyexplicitand forward‐leaningguidanceforthe
futurepathofthefederalfundsrate—inordertoprovideadditionalmonetarypolicyaccommodationto
helpendtherecessionandstrengthentheeconomicrecovery.
1
Theseunconventionalpolicyactions
wereintendedtoputdownwardpressureonreallonger‐terminterestratesandmoregenerallyto
improveoverallfinancialconditions,includingbolsteringpricesforcorporateequitiesandresidential
properties.Morefavorablefinancialconditionswould,inturn,helpboostaggregatedemandandcheck
undesirabledisinflationarypressuresby
providingincreasedsupportforconsumerspending,
construction,businessinvestment,andnetexports.
AsizablenumberofstudieshaveinvestigatedthefinancialmarketeffectsoftheFOMC’sunconventional
actions,especiallywithregardtotheFederalReserve’sassetpurchases,andfoundnoticeableeffects,
onbalance,onlong‐terminterestrates.
2
Bycontrast,therehavebeenrelativelyfewstudiesofthe
effectsoftheseactionsonrealactivityandinflation,andthisworkhasfocusedalmostexclusivelyon
macroeconomiceffectsarisingonlyfromthereductionsintermpremiumscausedbylarge‐scaleasset
purchases.
3
Forthesereasons,relativelylittleisknownaboutthemacroeconomicstimulusprovidedby
theeffectsoftheFOMC’spost‐crisisforwardguidanceandassetpurchasesonexpectationsforthe
futurepathofshort‐terminterestrates,norhowthoseexpectationaleffectsmayhaveinteractedwith
termpremiumshifts.Acentral
themeofthispaperisthatthetwotypesofpolicyactionsarehighly
interdependent,andthattheirmacroeconomiceffectsthusneedtobeevaluatedjointly.Intryingto
gaugethemacroeconomiceffectsofunconventionalmonetarypoliciessincelate2008,wetakeinto
accountthemarkedevolutionovertimeofthe
public’sexpectationsforbothfuturemonetar ypolicy
andtheoveralleconomy;thesefactors,asouranalysiswillshow,haveanimportantbearingonthe
actualmonetarypolicystimulusprovidedbyforwardguidanceandquantitativeeasinginrecentyears.
Thenextsectionofourpaperprovidesasummaryoftheunconventional
monetarypolicyactionstaken
bytheFederalReservesincelate2008.Thethirdsectionpresentsourmethodologyandassessmentof
howprivate‐sectorexpectationsaboutmonetarypolicyevolvedfromearly2009throughlate2013.In
particular,weusesurveydatafromtheBlueChipEconomicIndicatorstoinferthegradualchanges
that
havetakenplacesinceearly2009inprivate‐sectorperceptionsoftheFOMC’simplicitpolicyrule—that
is,thewayinwhichshort‐terminterestrateswouldbeadjustedinresponsetomovementsinreal
activityandinflation.ThefourthsectiondiscussestheotherchanneloftheFOMC’sunconventional
policy
actions,theestimatedeffectsoftheFederalReserve’squantitativeeasingprogramsonthe
trajectoriesofthetermpremiumsembeddedinlonger‐terminterestrates.Withtheseestimatesof
expectationaleffectsandtermpremiumshiftsinhand,weareinapositiontoscoretheactualstimulus
1
Althoughforwardguidanceforthefederalfundsratehadbeenusedinthepast,policymakersstillconsideredthe
natureofitsrecentusetobeunconventionalornontraditional;seeBernanke(2012),forexample.
2
ThesestudiesincludeBauerandRudebusch(2012),D’Amico,English,Lopez‐SalidoandNelson(2013),D’Amico
andKing(2013),Gagnonetal(2011),HamiltonandWu(2012),JoyceandTong(2013),KrishnamurthyandVissing‐
Jorgensen(2011),LiandWei(2013),MeaningandZhu(2011),Neely(2010),Rosa(2012),Rogers,Scottiand
Wright
(2014),andSwanson(2011).
3
ThesestudiesincludeChen,Curdia,andFerrero(2011),Chungetal(2012),BaumeisterandBenati(2013),Gertler
andKaradi(2013),andWealeandWieladek(2014).