The Federal Reserve Board of St. Louis has published an article by Richard G. Anderson, Charles S. Gascon, and Yang Liu titled Doubling Your Monetary Base and Surviving: Some International Experience:
The authors examine the experience of selected central banks that have used large-scale balancesheet expansion, frequently referred to as "quantitative easing," as a monetary policy instrument. The case studies focus on central banks responding to the recent financial crisis and Nordic central banks during the banking crises of the 1990s; others are provided for comparison purposes. The authors conclude that large-scale balance-sheet increases are a viable monetary policy tool provided the public believes the increase will be appropriately reversed.
The authors review current and past examples of central bank balance sheet expansion and conclude:
During the past two decades, large increases — and decreases — in central bank balance sheets have become a viable monetary policy tool. Historically, doubling or tripling a country's monetary base was a recipe for certain higher inflation. Often such increases occurred only as part of a failed fiscal policy or, perhaps, as part of a policy to defend the exchange rate. Both economic models and central bank experience during the past two decades suggest that such changes are useful policy tools if the public understands the increase is temporary and if the central bank has some credibility with respect to desiring a low, stable rate of inflation. We find little increased inflation impact from such expansions. For monetary policy, our study suggests several findings: (i) A large increase in a nation's balance sheet over a short time can be stimulative. (ii) The reasons for the action should be communicated. Inflation expectations do not move if households and firms understand the reason(s) for policy actions so long as the central bank can credibly commit to unwinding the expansion when appropriate. (iii) The type of assets purchased matters less than the balance-sheet expansion. (iv) When the crisis has passed, the balance sheet should be unwound promptly.
For monetary policy, our study suggests several findings:
Econbrowser's James Hamilton has presented a review of QE2 and concludes:
I agree with John that the primary effects of QE2 come from restructuring the maturity of government debt, and that any effects one claims for such a move are necessarily modest.