Report | Economic Growth

Gauging the Impact of the Fed on Inequality During the Great Recession

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In a recent working paper presented at a symposium at the Brookings Institution’s Hutchins Center on Fiscal and Monetary Policy, EPI Research Director Josh Bivens assesses claims that the Federal Reserve’s very low interest rates and large-scale asset purchases (LSAPs), commonly known as quantitative easing, increased inequality by driving up the price of stocks and other assets. He finds that while it would have been preferable to use more fiscal stimulus during the recovery from the Great Recession, Congress’s failure to do so forced the Fed’s hand. And he further argues that to the extent that the Fed’s expansionary policies pushed the economy closer to full employment, they reduced inequality relative to what would have occurred in their absence.

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