Time to operationalise twist in the U.S economy through step up analysis via quantitative easing and operation twist

Through this paper, the authors have evaluated the effect of the Federal Reserve's purchase of financial assets of commercial banks, long-term Treasuries and other long-term bonds as it had done in 2008–2009(QE1) and in 2010–2011(QE2) on the various factors that determine the state of an economy and uses its effects to estimate what should be expected from the recently announced monetary policy by the Federal Reserve, popularly known as “Operation Twist”. The authors analyze the effect of QE1 and QE2 on five major indicators of an economic recovery which are stock indexes, interest rates, employment rates, inflation rates and industrial outputs. Having considered the effect of QE1 and QE2 on the economy and focused on the need of operation twist as per the next step from the fed the authors have inferred that the main objective behind operation twist is to lower the long term Treasury Bond rates and to increase the short term treasury bill rate. Considering the present values of long term Treasury bond and short term treasury bill rates, the authors predict the future values of Treasury bond and treasury bill rates using bootstrapping method. Thus to add on, multiple regression is being used, on earning yield vis a vis the Treasury Bill rate and Treasury Bond rate has been done. The authors have concluded that through this study analysis of quantitative easing and the effectiveness prediction of Operation twist reflects the deep scenario of present economy and the change in economic position from the recession of 2008 till date.