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Multiple Structural Breaks in Interactive Effects Panel Data and the Impact of Quantitative Easing on Bank Lending

Jan Ditzen, Yiannis Karavias, Joakim Westerlund

arXiv 12 Nov 2022 · Econometrics · 8 citations (OpenAlex)

arXiv:2211.06707 · PDF · DOI · OpenAlex · Extracted main text

Abstract

This paper develops a new toolbox for multiple structural break detection in panel data models with interactive effects. The toolbox includes tests for the presence of structural breaks, a break date estimator, and a break date confidence interval. The new toolbox is applied to a large panel of US banks for a period characterized by massive quantitative easing programs aimed at lessening the impact of the global financial crisis and the COVID--19 pandemic. The question we ask is: Have these programs been successful in spurring bank lending in the US economy? The short answer turns out to be: “No”.

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