A quantitative easing experiment

Adrian Penalver, Nobuyuki Hanaki*, Eizo Akiyama, Yukihiko Funaki, Ryuichiro Ishikawa

*Corresponding author for this work

Research output: Contribution to journalArticlepeer-review

3 Citations (Scopus)


We experimentally investigate the effect of a central bank buying bonds for cash in a quantitative easing (QE) operation. In our experiment, the bonds are perfect substitutes for cash and have a constant fundamental value which is not affected by QE in the rational expectations equilibrium. We find that QE raises bond prices above those in the benchmark treatment without QE. Subjects in the benchmark treatment learned to trade the bonds at their fundamental value but those in treatments with QE became more convinced after repeated exposure to the same treatment that QE boosts bond prices. This suggests the possibility of a behavioural channel for the observed effects of actual QE operations on bond yields.

Original languageEnglish
Article number103978
JournalJournal of Economic Dynamics and Control
Publication statusPublished - 2020 Oct


  • Expectation dynamics
  • Experimental asset market
  • Quantitative easing

ASJC Scopus subject areas

  • Economics and Econometrics
  • Control and Optimization
  • Applied Mathematics


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