Fed saved US from even larger pandemic downturn – ECB paper
Unemployment would have risen by 20% more without Fed’s bond buying, researchers find
The combined actions of the Federal Reserve and the US Treasury prevented Covid-19 from triggering a major recession, a working paper published by the European Central Bank finds.
In Monetary and fiscal complementarity in the Covid-19 pandemic, Jagjit Chadha et al analyse the actions of the Fed and the US government in 2020. The Fed purchased “extraordinary quantities of securities” while the US government ran a deficit of 17% of projected GDP, the authors say.
Their model finds that the Fed’s
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