The evidence in this paper points to a simple story. QE follows fiscal events, but it has not systematically caused an expansionary fiscal stance. I show that deficits widen before QE announcements and are not associated with a persistent increase in the primary balance, the CAPB, or the fiscal impulse. Where I do find a difference is around severe shocks (recessions, COVID-19) when the Fed’s purchasing of Treasury securities was already large or when it is actively buying.
