Date of Defense


Date of Graduation



Finance and Commercial Law

First Advisor

Inayat Ullah Mangla

Second Advisor

Onur Arugaslan

Third Advisor

Robert J. Balik


Quantitative easing measures, interest rates


This study focuses on the impact of Quantitative Easing measures done by the Federal Reserve and its impact on the U.S.A, with a focus on interest rates, financial markets and economic activity. The Quantitative Easing measures studied are Operation Twist, Quantitative Easing I as well as Quantitative Easing II. The secondary research is conducted using event studies, and different perspectives of economists have been taken into consideration. The answer whether further quantitative easing should be pursued by the Federal Reserve is debated. A different step-by-step view is given into reasons as to why this quantitative easing has been pursued. A comparative analysis has also been performed to show similarity and differences are shown. In terms of Quantitative Easing I, we derived through the event study method that the announcement dates have a significant impact on the volatility of the interest rates. The event studies show that four of the five announcement dates have cumulative abnormal returns that resemble a persisting fall, which coincides with the other studies.

Alternative event study procedures were used to calculate daily abnormal percentage changes of the interest rate on 10-year U.S. government bonds and the interest rate volatility, MOVE index. The results are consistent with and strengthen the results of the other researched studies. As for Quantitative Easing 2(b), more research needs to be done to correctly detect the impact whether it will be as effective. This study shows that the effect of Quantitative Easing I was much stronger than Quantitative Easing 2(a), and was more successful in bringing down rates. It looks like the Fed is lacking its “surprise element.” According to a survey by Reuters (2012), “Less than half of the economists polled felt like the Fed’s “Operation Twist” move to further push down long-term interest rates was successful.

Access Setting

Honors Thesis-Open Access

Rai.pdf (1724 kB)