Date of Award
Doctor of Business Administration (DBA)
Jack Welch College of Business
Dr. Kwamie Dunbar
Dr. Abu Amin
Dr. Michael Gorman
The recent financial crisis has triggered questions regarding the role of the Federal Reserve Bank and the effectiveness of its intervention in the financial markets, post the crisis. This paper investigates the impact of huge spikes in excess reserves on the U.S. real gross domestic product. U.S. Federal Reserve in an effort to deal with the 2008 financial crisis instituted a series of programs aimed at taming the impact of the crisis. Through its emergency lending activities and Quantitative Easing (QE) programs, the Federal Reserve created a huge spike in excess reserves to levels not seen before. The empirical findings of this research show that a negative correlation exist between excess reserve and U.S. real gross domestic product. In fact the results show that a 5% increase in excess reserves results in a 0.1% reduction in real GDP activity. The analysis also indicates that an increase in excess reserves negatively impact full employment and asset prices. Additionally, Federal funds rate show a significantly positive association to real gross domestic product, possibly evidencing the Feds payment of interest on excess reserves.
Adjei, P. J. (2018). The effect of excess reserves on U.S real gross domestic product. Jack Welch College of Business dissertation, Sacred Heart University, Fairfield CT.
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