Large-Scale Asset Purchases: A Study of Efficacy at the Zero Lower Bound1 Tyler G. Owensby Wabash College Department of Economics Senior Research Paper December 17, 2014 Abstract: In this paper, I examine the effectiveness of the Federal Reserve’s large-scale asset purchase program implemented in November 2008, after they had reduced the federal funds rate to its zero lower bound. I discuss the economic theory behind stimulating the economy through the use of large-scale asset purchases, and provide empirical evidence on the efficacy of the program. After reviewing a study done by Joseph Gagnon in 2010, I implement two similar methodologies in order to analyze whether or not the program has achieved its desired effects. I find that the program has had meaningful and long-lasting reductions on the yields of various longer-term securities, and although the reductions have recently subdued, they have continued throughout the entire duration of the program.

                                                                                                               1 I would like to thank Dr. Christie Byun for all she has done to prepare me to write this paper.

 

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Table of Contents

I. Introduction……………………….………………………….. 3

II. Literature Review………………………………….…………. 5

III. Theoretical Analysis………………………………..………… 7

IV. Empirical Analysis……………………………….………........ 9

Event Study of LSAP Communications………….…...…..... 9

Data………………………………………….…...….. 9

Results…………………………………...….……..... 10

Ordinary Least Squares Model………………….……….… 13

Data………………………………………………..... 13

Results…………………………………...………...... 16

V. Comparison to Past Research………………………….……. 18

VI. Conclusion…………………………………………...…..….... 19

Future Work……………………………………………...… 20

VII. Appendix………………………………………….…………... 21

VIII. Bibliography…………………………………………...……... 23

 

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I. Introduction

In December 2008, in the midst of the worst economic downfall and financial crisis since

the Great Depression, the Federal Reserve found itself in a rather difficult situation. Not only

were they dealing with millions of lost American jobs and a devastating housing bust, but they

were also facing the complete drying up of America’s private credit markets. In attempt to ease

the economic outlook and encourage investment, the Federal Open Market Committee (FOMC)

lowered the federal funds rate target to its zero lower bound. With the loss of use of their main

monetary policy tool, the Federal Reserve needed to rely upon unconventional policy

instruments in order to increase the rapidly decreasing financial situation. The Fed decided the

best methodology would be to implement a large-scale asset purchase (LSAP) program,

consisting of large purchase

quantities of longer duration assets in

order to drive down the borrowing

rates of those securities. Alongside

these purchases, the Fed utilized the

power of public communication in

order to lower the market

expectations of the future federal

funds rate. In fact, the LSAP

program kicked off with the

November 2008 announcement that the Fed would begin purchasing up to $600 billion worth of

housing agency debt and agency mortgage-backed securities, and furthered the program with the

March 2009 announcement to purchase longer-term Treasury securities. As you can see in Chart

 

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1, majority of the Fed’s asset purchases during this timeframe were from assets with two to ten

year maturities, all with the intention to improve private credit market conditions. Although the

magnitude of purchases has subdued in more recent times, the program has still displayed

significant levels of asset purchases never experienced in the history of the Federal Reserve.2 In

light of the LSAP’s fair share of successes over its tenure, many studies have been conducted to

validate the efficacy of the program. Many of these studies, however, fail to analyze the overall

effectiveness of the program throughout its entire duration. When looking at the entire duration

of the program, have the LSAPs continued to display favorable results, and how have these

results differed in more recent times? With the recent October 2014 FOMC announcement to

end the asset purchase program, it is important for economic scholars to revisit their studies and

ask questions like these, in order to efficiently judge the overall efficacy of the program.

The remainder of the paper will include a literature review, theoretical analysis, empirical

analysis, a conclusion, and an appendix with extra charts and tables. The literature review will

summarize other studies and discuss where there is room for my research. The data from these

studies will be from early periods of the LSAP program, and my study will extend the data

through December 2014. The theoretical analysis will provide a basis of the underlying

economic theory and the models I plan to use. The empirical analysis section will consist of:

description of my variables and summary statistics, descriptions of my procedure for collecting

data and its limitations, discussion of my different models, and interpretation of the results.

Ultimately, my conclusion will provide an answer to my topic question, and point out the best

areas for further research.

                                                                                                               2  The complete historical pace of purchases by the Fed throughout the LSAP program can be found in Chart 2 in the Appendix.

 

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II. Literature Review

Since the implementation of the LSAP program, many scholars have attempted to prove

or disprove, through different methods of empirical analysis, the true effectiveness of the asset

purchases on reducing the yield of longer duration bonds.3 With so many studies being

conducted, there have inevitably been many different research questions posed by these elite

scholars, which helps separate the work each have done. A highly esteemed study was

conducted by Taeyoung Doh, a Senior Economist for the Federal Reserve of Kansas City, which

he highlighted in his paper, “ The Efficacy of Large-Scale Asset Purchases at the Zero Lower

Bound.” This article develops an analysis of the impact of the large-scale purchases through the

use of a preferred habit theory model. According to Investopedia, the preferred habit theory

claims “different bond investors prefer one maturity length over another and are only willing to

buy bonds outside of their maturity preference if an appropriate risk premium is available”

(Preferred Habitat Theory). Doh utilized this model to measure the impacts on the yield curve

between risk-neutral and risk-averse arbitrageurs, and finds that the magnitude of the decrease in

the term premium depends heavily upon the arbitrageur’s level of risk aversion. According to

the study, “when risk aversion is high, as was during the crisis, LSAPs are able to induce a larger

decline in the term premium” (Doh). For risk-averse arbitrageurs, Doh found that the LSAP

program decreased the 10-year term premium by 39 basis points from January 2009 to June

2009.

Rather than focusing solely on the U.S. implications of the program, Christopher J. Neely

developed an analysis to include international implications in his January 2011 paper, “The

Large-Scale Asset Purchases Had Large International Effects.” Through the use of an event

                                                                                                               3  A summary of the estimated LSAP impacts found by many scholars can be found in Table 1 in the Appendix.

 

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study, Neely monitored how asset prices reacted to various macroeconomic announcements. He

utilized a relatively long two-day event window, which set him apart from many other scholars,

as well as, my own event study. For his event study, Neely used 8 key Fed announcements to

analyze how U.S. and foreign bond yields fluctuated based on the two-day announcement

window and intraday price changes. Similar to other scholars, he found that the asset purchases

were successful in lowering the yield on long-term assets, but found an even more significant

result, with a 107 basis point decrease. He also found that the LSAP program “reduced the yield

on foreign bonds and the spot value of the dollar, indicating that central banks are not toothless

when short rates hit the zero lower bound” (Neely).

In similar form to the Neely study, Joseph Gagnon utilized an event study in his 2010

paper, “Large-Scale Asset Purchases by the Federal Reserve: Did They Work?” By looking at 8

key Fed announcements, he observed the effects of those announcements only on different

functions of U.S. long-term bond yields. In his study, however, he observed the effects through

a one-day window and extended the study from the original announcement in November 2008, to

the FOMC statement from March 2010. From this analysis, Gagnon found that “all events that

raised market expectations of asset purchases lowered the yield on long term assets” (Gagnon).

Gagnon extended his study even further by employing an ordinary least squares regression

model to see how different macroeconomic variables and measures of supply affect the term

premium. By utilizing data from January 1985 to June 2008, he found that “the LSAPs reduced

the 10-year term premium by between 58 and 91 basis points” (Gagnon). His study is quite

unique, considering the fact that he found favorable results for the program in both methods,

despite the fact that he used different models, data sets, and time periods for the two methods of

analysis. These are only a few of the studies conducted by economic scholars, but as you can

 

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see, there are many different methodologies to analyze the efficacy of the Fed’s large-scale asset

purchase program.

III. Theoretical Analysis

The central focus of my paper will be to measure the overall efficacy of the Federal

Reserve’s LSAP program, and to analyze its effectiveness in more recent quarters. After reading

the Gagnon (2010) paper, I wanted to conduct a similar methodology, with updated data, in order

to measure the impact on long-term yields. My hypothesis is that by extending the date range of

the study, the LSAP program will continue to display favorable results in regards to reducing

long-term yields. Also, I postulate that the impacts of the program have subdued in more recent

times, but have continued to exhibit encouraging effects. This is my hypothesis because the Fed

has slowly reduced the scale of their purchases over time, and announced its ending in a recent

October 2014 announcement. If they are announcing the end of the program, they most likely

have seen the results they had desired, and are aiming to focus their efforts on increased

normalization of monetary policy. I believe the magnitude of its impact will be lower in more

recent times, because our economy is in a much different state than it was when other scholars

were conducting their studies in late 2009 and 2010. With a better economic outlook and a lower

magnitude of purchases, it makes sense for the responses to asset purchase announcements to

have a lesser impact on long-term yields.

My analysis consists of two methodologies similar to the ones used by Gagnon, which

include an event study and an OLS regression model with data updated through the third quarter

of 2014. My analysis begins with the event study, which utilizes a one-day announcement

window to measure the effects of the Fed’s announcements on different functions of long-term

yields, which will be listed and described in a later section. To announcement window is

 

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determined by the difference between the closing rate on the day of the announcement, and the

closing rate of the day prior. I developed a new baseline event set, consisting of 19 different

events that have specific references to the LSAP program. In order to illustrate the size of the

LSAP announcement effects compared to other general FOMC news, I measure the results for

the baseline event set separately from the results of all the remaining announcements that don’t

reference the LSAP program. Since my study is also attempting to compare the magnitude of the

impact during the more recent quarters compared to the time period conducted by Gagnon, I

provide cumulative changes (in basis points) for two different time periods: November 2008 to

March 2010, and March 2010 to November 2014.

For the OLS regression method, I use different data from the event study to measure the

impact of asset purchases on the ten-year term premium. Similar to Gagnon, I utilize regression

models to explain the historical variation in the term premium using factors related to: 1)

business cycle factors, 2) economic uncertainty, and 3) net supply of public debt securities. I

explain the historical variation by employing an OLS regression model of the form:

𝑡𝑝!!" = 𝑋!𝛽 + 𝜀!

where 𝑡𝑝!!" is the ten-year term premium, and 𝑋!  represents a set of observable factors, which are

my independent variables.4 If I am able to meet all the requirements of the classic econometric

model, my OLS regressions will be the best linear unbiased estimator (Barreto and Howland).

By utilizing data from January 1985 to July 2014, and regressing the ten-year term premium on

the different independent variables (described later), I am able to measure the actual effect of the

Fed’s asset purchases on the ten-year term premium. My OLS model consists of two separate

regressions: one including the factor of net supply of public debt, and another solely capturing

                                                                                                               4  The full model equations can be found in the Appendix.

 

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the effects of the business cycle and economic uncertainty. I will provide more in-depth

descriptions of the data and variables used in both studies in the next section.

IV. Empirical Analysis

1. Event Study of LSAP Communications:

Data

For the event study, I use daily data from the St. Louis Federal Reserve FRED Database,

as well as, a database from Kim and Wright (2005). The FRED Database provided financial

variables such as: the two and ten-year U.S. Treasury yields, the ten-year Swap rate, and the Baa

Index. The database from Kim and Wright (2005) provided the daily rates for the ten-year term

premium. The make-up and description of each of the variables used can be found in Table 2

below. The two-year U.S. treasury variable serves as a means of comparison between the

announcement effects on short-term rates and the long-term rates (ten-year treasury and term

premium). The ten-year swap rate and the Baa corporate bond yield index are included to

estimate the effects on the yields of assets that weren’t purchased by the Fed. As previously

mentioned, I developed a baseline event set consisting of official LSAP communications. My

 

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baseline set included the original set used by Gagnon, as well as, 11 more key communications.5

As with any observational study, there were obvious limitations in my dataset and method.

Since it is rather difficult to find daily term premium data, I had to rely upon estimations from

Kim and Wright (2005), in order to measure the impacts of the announcements on the ten-year

term premium. Another issue with the event study was the use of the one-day announcement

window. It is possible that there is a significant lag to the reactions of the news by many market

participants, so a one-day window may not fully capture the effect of the announcements.

Utilizing a two-day (or longer) window, and comparing the results to the one-day results may

help capture the full effect of the LSAP announcements.

Results

Table 4 displays the results of my event study, which includes the changes in interest

rates on each day of the specific communications that I have selected. Despite a few

occurrences, similar to the Gagnon study, the interest rates moved in their intended and expected

direction on each day of the baseline events. In the early announcements from Gagnon’s

baseline set, the interest rates fell substantially due to the announcements of the start of the

program, and larger-than-expected asset purchases. With the more recent events in the baseline

set, such as March, September, and October 2014, I saw increased long-term rates (9, 2, and 6

basis points, respectively). This result makes sense because the Fed was announcing the decline

of their asset purchases in March and September, and October marked the end of the program.

On January 29, 2014, the Fed began to announce a reduction in future LSAPs, but I found that

there was a reduction in the long-term rates, but the decline was very small (only 6 basis points

for the term premium). This unintended result could’ve occurred because of the reaction lag to

                                                                                                               5 Table 3 in the Appendix provides a list of each of the events that make up the baseline set, and descriptions of how they apply to the LSAP program.

 

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the announcements of the market participants. It is important to note that the impact on the long-

term rates is greater for the cumulative change of the baseline set, than the cumulative change of

the baseline set and the other FOMC announcements. This indicates that the effects were

greatest when there was news directly relating to the future expectations of the LSAP program.

Chart 3 displays the cumulative changes in interest rates across the 19 baseline events.

Although the interest rates declined less notably with the updated data set, they still declined

quite a bit for each of the categories of long-term assets, with the ten-year Treasury yield and

ten-year term premium declining 94

and 69 basis points, respectively.

When comparing the magnitude of

effect on the long-term rates (ten-

year Treasury and term premium)

and short-term rates (two-year

Treasury), the long-term rates

displayed a greater level of impact.

This indicates the success of the

LSAPs on achieving their intended result. The widespread effects of the LSAP program can be

seen by the substantial declines in the swap rates and Baa Index yields, which weren’t included

in the goals of the Fed.

Chart 4 displays the difference in total cumulative impact between different time periods:

Pre-March 2010 and Post-March 2010. This analysis allows me to make conclusions regarding

the lasting impact of the program, and the announcement effects. As you can see in the chart, the

Pre-March 2010 (Gagnon study) results exhibits rather large declines in the long-term rates, and

 

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the Post-March 2010 study

exhibits much smaller declines in

those rates. In fact, the ten-year

Treasury and ten-year term

premium rates showed slight

increases, at 5 and 1 basis points,

respectively. Although this may

come as a surprise to some, the

result actually makes sense

considering the nature of the Fed

announcements during the Post-March 2010 period. As previously mentioned, when the Fed

announced reductions in LSAPs, which characterized this time period, we should expect

increases in the long-term rates. The Baa Index in the Post-March 2010 period displays an

interesting result, because it shows that the reduction announcements had a large effect on other

non-purchased assets, which can be explained by the increase of 52 basis points. Altogether, the

event study displays that longer-term interest rates declined by up to 112 basis points around

these key LSAP announcements, and up to 76 basis points when looking at the total cumulative

change over the duration of the LSAP program.

2. Ordinary Least Squares Model:

Data

For the OLS model, I use quarterly data from January 1985 to July 2014, because it is the

full sample over which data on these different variables is available. The quarterly data comes

from a variety of sources such as: Bureau of Labor Statistics (BLS), St. Louis Federal Reserve

 

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FRED Database, Federal Reserve of New York, and the Michigan Survey of Consumers. The

FRED Database provided the variables for my measure of volatility and core CPI, the BLS

provided the necessary data for the unemployment gap variable, the Michigan Survey provided

the data for the inflation disagreement, and the Federal Reserve of New York provided the

variable for unadjusted supply. The make-up and description of each of the variables used can

be found in Table 5 below. After dropping a few observations where there were missing values

for the interquartile range of five-year-ahead inflation expectations (inflation disagreement), I

have a total of 108 observations for the 30-year period.

The dependent variable in my study is the ten-year term premium, which was collected

from the same Kim and Wright (2005) database as the event study. Since I am predicting the

term premium from a limited data set, I know that the coefficients will not be perfect. Although

they aren’t perfect, they provide me with a good estimate of how much of an impact asset

purchases has on the ten-year term premium. The different independent variables were selected

because of their potential effects on the term premium. The variables for unemployment gap and

 

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core CPI serve as variables to proxy for the business cycle fluctuations that could affect the term

premium. I used the natural log of the core CPI variable in order to deal with the potential non-

linearity of the core CPI data. I decided to use the natural log of core CPI after seeing that it

substantially improved the statistical significance of my results. The variables for inflation

disagreement and realized volatility serve as indicators of economic uncertainty. The unadjusted

supply variable is included to capture the effects of changes in the net public sector supply of

longer-term debt securities. Unlike the Gagnon study, my supply variable doesn’t include the

amount of U.S. debt securities held by foreign official agencies, due to the inability to collect the

relevant data. The “unadjusted” name comes from the fact that my supply variable isn’t

expressed as ten-year Treasury equivalents, and doesn’t capture the relevant variation in the

composition of the outstanding stock of debt securities (Gagnon).6 Below, in Table 6, is a

summary of my data, compiled with means and standard deviations for each variable reported.

                                                                                                               6  Joseph Gagnon utilized unadjusted and duration-adjusted supply variables in order to capture this effect, although the variation in his results between the two variables is minor.

 

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Results

In order to determine the effects the independent variables have on the ten-year term

premium, I look at the OLS coefficients. In order to interpret the results much easier, I include

the OLS regression results from both models in a single table in Table 7 below. The first two

columns of Table 7 present results from a regression of the ten-year term premium on the

different types of independent variables, including the measure of unadjusted supply of public

debt. The third and fourth columns present results without any public debt supply variable. This

second model is included solely as a means of comparison, between the inclusion and non-

inclusion of the supply variable. It is important to note that all of the variables in the first model,

excluding the constant value, displayed p-values of less than 1%, indicating that all the results

have high statistical significance. The second model, on the other hand, doesn’t return as

statistically significant results, which shows the significance of the supply variable in estimating

the ten-year term premium.

 

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In order to effectively address my research question, my interpretation will consist solely

of the results from the first model, in order to analyze the effect of supply on the ten-year term

premium. It is first important to note the relatively high adjusted R-squared value for this model.

The model suggests that the values are predicted 55.7% better than using the sample average.

With such a high value, I am able to assume that the model returns meaningful results, although

it could still be improved by including more relevant variables. From the results, I find that all of

the explanatory variables have the expected sign, except the realized volatility variable.

Specifically, a one-percentage point increase in the unemployment gap, core CPI, and inflation

disagreement increase the term premium by about 23, 34, and 63 basis points, respectively. The

realized volatility coefficient suggests that a one-percentage point increase in the realized

volatility decreases the term premium by about 136 basis points. This is a rather surprising

result, not in regards to magnitude, but the direction of the impact, because Gagnon’s results

displayed an increase in the term premium by about 100 basis points. This shocking result could

be attributed to the fact that I had to calculate my realized volatility variable differently, and my

calculation was a much simpler version than the six-month realized daily volatility of the on-the-

run ten-year Treasury yield used by Gagnon.

When looking at the unadjusted supply variable, I see a favorable and expected result,

which contributes to proving my hypothesis correct. In order to apply my results to the effect of

the LSAPs on the term premium, I must look at the supply of publicly held debt securities as a

percentage of nominal GDP. With this in mind, the results from Table 7 suggest that a 1% of

GDP increase in the long-term debt supply increases the term premium by 4.2 basis points. In

order to analyze the effects in term of overall asset purchases, I must multiply the coefficient by

the percentage of 2009 nominal GDP that the Fed purchases made up. Considering the Fed

 

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purchased $1.725 trillion in assets between December 2008 and March 2010, and the U.S.

nominal GDP in 2009 was $14.567 trillion, the LSAPs made up roughly 12% of the 2009

nominal GDP. Using this value, I can assume that a 1% of GDP increase in the supply increases

the term premium by about 50 basis points. According to these estimates, the total Federal

Reserve asset purchases reduced the term premium by 50 basis points, indicating the success of

the LSAP program.

V. Comparison to Past Research

After conducting my study, I found many similar and a few different results as the other

studies I discussed in the literature review, although we had different methods of conducting the

research. As discussed in the literature review, many scholars have attempted to measure the

efficacy of the LSAP program, but they have all had different methodologies or datasets. Since

my study solely focused on the U.S. implications of the LSAPs, my study differed from the

internationally focused scholars who aimed to pinpoint the effects on foreign bond yields, as well

as, the effects on the U.S. long-term yields. A few scholars have performed similar event

studies, but the variance in event windows and data used clearly show the differences in our

methodologies. Despite these differences, my two methods displayed similar reductions in the

long-term rates, which can be compared in Table 1 in the Appendix.

Although my study was conducted very similarly to the one done by Joseph Gagnon,

there were enough differences that make the results worth looking into. I utilized a longer time

period for both methods, which allowed me to account for the entire duration of the LSAP

program. Since my research spanned the entire program, I am able to make final conclusions in

regards to the efficacy, rather than attempting to make conclusions in the heart of the program.

Despite the extended data set, as well as, much different economic times present in my research,

 

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I was able to find similar results to the same OLS models used by Gagnon (2010) and Kim and

Wright (2005). You can see the reduction results across the three different studies in Table 8

below, as well as, 95% confidence intervals around those results. When comparing the results of

my research to the other two studies, I am quite satisfied with the output.

VI. Conclusion

In a time when the economic outlook continued to deteriorate, the Federal Reserve faced

a rather difficult task of expanding their monetary policy repertoire, to stimulate economic

activity outside of their typical policy operations. In this paper, I examined the efficacy of one of

the Fed’s newly established policy tools at the zero lower bound – large-scale purchases of

longer duration assets. By lowering the net supply of long-term assets through asset purchases, it

seems as if the LSAP program achieved its intended result of lowering the term premium. My

analysis consisted of two methods: an event study to determine the effects of the Fed’s

announcements on different functions of long-term yields, as well as, an OLS regression model

to see how different macroeconomic variables effect the ten-year term premium. By extending

the range of data up to the end of the LSAP program in November 2014, I am able to make

conclusions about the overall efficacy, which many other scholars have failed to do. The overall

reduction in the ten-year term premium associated with the LSAPs through November 2014

 

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appears to be somewhere between 50 and 80 basis points. By including other variables in my

event study, I am able to see that the LSAP program had widespread effects through reductions

in other long-term rates such as: Treasury securities, swap rates, and corporate bonds. These

rates saw reductions in the range of 37 to 112 basis points. These results are in line with the

findings of other scholars, and with that, I can conclude that the Federal Reserve’s LSAP

program did lower long-term borrowing rates.

Future Research

It is important to think about ways in which this study can be further developed in order

to provide even more knowledge in regards to the effectiveness of these large-scale purchases.

For future work to expand or revise this study, the inclusion of many other omitted variables

such as: the ten-year agency debt yield, the current-coupon thirty-year agency mortgage-backed

security (MBS) yield, and the thirty-year fixed mortgage rate, would be a great start. By

including variables for agency debt and agency MBS, I would be able to draw conclusions in

regards to the LSAP effects on agency assets with high prepayment risk, compared to the risk-

free Treasury securities. Also, it would be interesting to include international characteristics in

my study, in order to examine the international implications of LSAPs made by the Federal

Reserve. Many countries throughout the world have found themselves constrained by the zero

lower bound, so the development of new monetary policy tools is an important task for all. If we

are able to draw positive conclusions about potential LSAP effects in foreign countries, then we

might be able to supply them with the necessary solutions to stimulate their economic outlook.

With the issue reaching far beyond U.S. borders, further research and development has the

ability to bring researchers closer and closer to determining the optimal policy tools when

constrained by the zero lower bound.

 

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VII. Appendix

Model Equations:

#1:  Ten-Year Term Premium = b_0 + b_1 UnemploymentGap + b_2 CoreCPI + b_3 InflationDisagreement + b_4 RealizedVolatility + b_5 Supply + ε

#2:  Ten-Year Term Premium = b_0 + b_1 UnemploymentGap + b_2 CoreCPI + b_3 InflationDisagreement + b_4 RealizedVolatility + ε

 

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VIII. Bibliography

Barreto, Humberto, and Frank Howland. Introductory Econometrics: Using Monte Carlo

Simulation with Microsoft Excel. New York: Cambridge UP, 2006. Print.

Doh, Taeyoung. "The Efficacy of Large-Scale Asset Purchases at the Zero Lower

Bound." Economic Review (01612387). 95.2 (2010). Print.

Gagnon, Joseph, Matthew Raskin, Julie Remache, and Brian Sack. "Large-scale Asset Purchases

by the Federal Reserve: Did They Work?" Economic Policy Review (19320426). 17.1

(2011). Print.

Kim, Don H., and Jonathan H. Wright. "An Arbitrage-Free Three-Factor Term Structure Model

and the Recent Behavior of Long-Term Yields and Distant-Horizon Forward

Rates." Finance and Economics Discussion Series 2005-33 (2005). Board of Governors

of the Federal Reserve System. Web. 13 Dec. 2014.

Neely, Christopher J. "The Large-Scale Asset Purchases Had Large International

Effects." Working Paper Series 018C (2010). Federal Reserve Bank of St. Louis

Research Division. 31 Jan. 2011. Web. 12 Dec. 2014.

"Preferred Habitat Theory." Investopedia. N.p., 11 July 2007. Web. 16 Dec. 2014.

<http://www.investopedia.com/terms/p/preferred-habitat-theory.asp>.