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LUND UNIVERSITY LIBRARIES

Quantitative Easing and Fiscal Policy

Johnsson, Anton LU (2023) NEKH02 20222
Department of Economics
Abstract
This thesis investigates if fiscal policy and quantitative easing (QE) can interact to raise the inflationary effect from central bank asset purchases. This is done by applying a distributed lag model on a set of macroeconomic variables for Sweden and the United States. The results show strong signs of interaction between the two policies in the U.S. but weaker and less clear results in Sweden. The overall results indicates that the outcome of policy actions can vary greatly depending on the direction of the respective actions. QE purchases can result in overshooting the inflation target while expansive fiscal policy is conducted or be rendered useless if fiscal policy is contractionary. These are findings that can inspire to further... (More)
This thesis investigates if fiscal policy and quantitative easing (QE) can interact to raise the inflationary effect from central bank asset purchases. This is done by applying a distributed lag model on a set of macroeconomic variables for Sweden and the United States. The results show strong signs of interaction between the two policies in the U.S. but weaker and less clear results in Sweden. The overall results indicates that the outcome of policy actions can vary greatly depending on the direction of the respective actions. QE purchases can result in overshooting the inflation target while expansive fiscal policy is conducted or be rendered useless if fiscal policy is contractionary. These are findings that can inspire to further research that could be of great importance for policy makers. (Less)
Please use this url to cite or link to this publication:
author
Johnsson, Anton LU
supervisor
organization
course
NEKH02 20222
year
type
M2 - Bachelor Degree
subject
keywords
quantitative easing, fiscal policy, inflation, United States, Sweden
language
English
id
9108156
date added to LUP
2023-05-29 12:02:12
date last changed
2023-05-29 12:02:12
@misc{9108156,
  abstract     = {{This thesis investigates if fiscal policy and quantitative easing (QE) can interact to raise the inflationary effect from central bank asset purchases. This is done by applying a distributed lag model on a set of macroeconomic variables for Sweden and the United States. The results show strong signs of interaction between the two policies in the U.S. but weaker and less clear results in Sweden. The overall results indicates that the outcome of policy actions can vary greatly depending on the direction of the respective actions. QE purchases can result in overshooting the inflation target while expansive fiscal policy is conducted or be rendered useless if fiscal policy is contractionary. These are findings that can inspire to further research that could be of great importance for policy makers.}},
  author       = {{Johnsson, Anton}},
  language     = {{eng}},
  note         = {{Student Paper}},
  title        = {{Quantitative Easing and Fiscal Policy}},
  year         = {{2023}},
}