I have read about Quantitative Easing (QE) and its attempt to bring back inflation. In this, central banks create money, then give it to other banks that buy government bonds, corporate bonds, and assets, in order to increase prices.

I believe there are some drawbacks with this, such as perhaps an unfair preference of corporate bonds of large firms compared to SMEs in this "trickle-down" money proliferation, but I could not find evidence or numbers on this.

Regarding large firms whose corporate bonds are bought up, I am wondering if there are any measurable effects on the cost of corporate financing. QE is happening since 2009, but I could not find numbers regarding its actual effects. Also, there should be some competition between large firms as to which one's bonds are bought with the new money.

Are you aware of empirical results regarding the changing cost of capital and competition between firms for fiat money due to QE?

  • $\begingroup$ It is an interesting and important question. The BoE announced corporate bond purchases in August 2016 (to start in september) and the ECB started buying them on 8 June 2016. The Fed does not do them (so far). So there may not be much data available on the effects yet, IMO. $\endgroup$ – noob2 Oct 18 '16 at 12:13
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    $\begingroup$ So before, it was mostly government bonds, right? - Is there any solid modeling or other literature on the hypothetical/predicted effects of this new type of QE? $\endgroup$ – Marie. P. Oct 18 '16 at 12:16

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