Graduation Year

2022

Date of Submission

4-2022

Document Type

Open Access Senior Thesis

Degree Name

Bachelor of Arts

Department

Economics

Reader 1

Julio Garin

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Terms of Use for work posted in Scholarship@Claremont.

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2022 Robert X Driscoll

Abstract

This paper investigates and compares the effects of the Fed’s quantitative easing policies on US inflation during the Global Financial Crisis and the Covid-era up to February of 2022. As inflation continues to rise, a quantitative measurement of the Fed’s monetary policy response to recessions and its resulting effect on the price level is becoming increasingly relevant. Supporting the quantity monetary theory, I test the impact of the Fed’s increasing their total assets and securities on their balance sheet on CPI and core CPI. Using multiple time series regressions and a single lag component on the analyzed variables. The model best fit the GFC-era data; however, the model saw greater impact of the predictor variables on CPI in the Covid-era data. The model showed that the lag variables were less significant. To determine statistically significant lead times and the quantitative effects of an increase of the money supply, a data set that contains the entire inflationary cycle associated with the Coronavirus pandemic must be used. Future models between an increase in the money supply and inflation are expected to yield greater significance.

Comments

A study of the Fed's monetary policy during financial shocks and its impact on inflation.

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