Macro Musings with David Beckworth Tyler Muir on How to Understand the Fed's Quantitative Easing
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Jan 26, 2026 Tyler Muir, a UCLA finance professor and Fisher Black Prize winner, explains why quantitative easing reshaped bond markets. He discusses how QE works in crises, the new "Tyler Rule" for balance-sheet use, QE’s role during COVID, and how purchases and announcements affect markets. Short, clear takes on market structure, intermediaries, and the risks of unwinding large Fed balance sheets.
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Early Career Born From Chance
- Tyler Muir accidentally stumbled into finance after studying math and applied to PhD programs on a whim.
- Graduating in 2008 positioned him to study the financial crisis as a PhD student at a pivotal moment.
Crises Add An Extra Risk Premium
- Financial crises amplify asset price declines beyond fundamentals via a risk-premium channel.
- These extra risk premia differentiate crisis-driven recessions from garden-variety recessions.
Intermediaries Drive Asset Prices
- Asset prices are often set by active financial intermediaries, not passive households.
- Shocks to intermediaries' balance sheets therefore have first-order effects on markets.