Quantitative Easing and Asset Price Bubbles

Abstract: This paper examines the effect of Quantitative Easing policies from the central banks of the United States and Sweden on the housing prices of their respective countries. Controlling for macroeconomic indicators focuses the analysis to just the effects of the bond purchases directly. Despite the magnitude of the intervention, and the seeming distortions present in both markets, a Local Linear Projection model suggests there is a very small effect. The lack of strong evidence for a substantial effect indicates the apparent distortion is driven by a factor besides Quantitative Easing programs.