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The objective of this paper is to estimate and analyse the impact of the quantitative easing policy on the stability of the financial system in the United States during the period (2008-2018). Several diagnostic tests have been utilized such as Augmented Dickey-Fuller (ADF) and Phillips-Perron (PP) tests for stationarity. The results show that some variables are stationary at level whereas other are stationary at first difference. Hence, the autoregressive distributed lag (ARDL) bounds testing approach was applied.
The results indicate that the quantitative easing policy has a weak significant positive impact on the stability of the financial system in the United States in the short and long term. Based on these results, the study recommends that the quantitative easing policy should not be overstated. In addition, taking into consideration the importance of developing the stock market, as well as attracting more domestic and foreign investment.
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