Case Detail

Case Summary

Quantitative Easing in the Great Recession

Case Number: 5-113-009, Year Published: 2014

HBS Number: KEL782

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Authors: Arvind Krishnamurthy; Taft Foster

Key Concepts

Economics, Financial Instruments, Government Policy


This case presents financial and macroeconomic data for the United States between 2007 and 2013, a period covering the financial crisis and Great Recession of 2007–2009 and the slow economic recovery from 2009 onward. During this period, the Federal Reserve had set the federal funds rate, its primary monetary policy instrument, near zero and was using additional monetary policy tools to stimulate the economy. One of these additional tools was quantitative easing (QE).

Students will use the data provided in the case to examine how financial markets reacted to QE actions by the Federal Reserve and to analyze the potential impact of QE on the macroeconomy.

Learning Objectives

After reading and analyzing the case, students will be able to:

  • Apply the event study methodology to analyze economic effects
  • Recognize how macroeconomic news affects the prices of financial securities
  • Describe the connections between the prices of financial securities and the macroeconomy
  • Debate the relative costs and benefits of quantitative easing and the optimality of Federal Reserve policy

Number of Pages: 23

Extended Case Information

Teaching Areas: Economics

Teaching Note Available: Yes

Geographic: United States

Industry: Banking

Organization Name: Federal Reserve

Organization Size: Large

Year of Case: 2013