Download this Paper Open PDF in Browser

Employment Effects of Unconventional Monetary Policy: Evidence from QE

61 Pages Posted: 19 Jul 2017 Last revised: 31 Aug 2017

Stephan Luck

Board of Governors of the Federal Reserve System

Tom Zimmermann

QuantCo, Inc.

Date Written: August 30, 2017


This paper investigates the effect of the Federal Reserve's unconventional monetary policy on employment via a bank lending channel. We find that while banks with higher MBS holdings issued relatively more loans after the first and third rounds of quantitative easing (QE1 and QE3), additional volume is concentrated in refinanced mortgages after QE1, and originated home purchase mortgages and C&I lending after QE3. Using spatial variation, we show that regions with a high share of affected banks experienced stronger lending and overall employment growth after QE3, but only weak employment effects after QE1. While the ability of households to refinance mortgages after QE1 spurred local demand, the resulting employment growth was confined to the non-tradable goods sector. In contrast, the increase in overall mployment after QE3 can be attributed to the supply of additional credit to firms. To support this finding, we use new confidential loan-level data to show that firms with stronger ties to affected banks increased employment and capital investment more after QE3. Altogether, our findings suggest that unconventional monetary policy can, similar to conventional monetary policy, affect real economic outcomes, but its effect depends on the type of targeted assets and on market forces outside the central bank's authority.

Keywords: monetary policy, employment, real effects, large scale asset purchases, quantitative easing

JEL Classification: E00, E02, E20, E65

Suggested Citation

Luck, Stephan and Zimmermann, Tom, Employment Effects of Unconventional Monetary Policy: Evidence from QE (August 30, 2017). Available at SSRN: or

Stephan Luck (Contact Author)

Board of Governors of the Federal Reserve System ( email )

20th Street and Constitution Avenue NW
Washington, DC 20551
United States

Tom Zimmermann

QuantCo, Inc. ( email )

Paper statistics

Abstract Views