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FEDERAL RESERVE BANK OF SAN FRANCISCO WORKING PAPER SERIES International Channels of the Fed’s Unconventional Monetary Policy Michael D. Bauer Federal Reserve Bank of San Francisco Christopher J. Neely Federal Reserve Bank of St. Louis December 2013 Working Paper 2012-12 /publications/economics/papers/2012/wp12-12bk.pdf The views in this paper are solely the responsibility of the authors and should not be interpreted as reflecting the views of the Federal Reserve Bank of San Francisco, the Federal Reserve Bank of St. Louis, or the Board of Governors of the Federal Reserve System. International Channels of the Fed’s Unconventional Monetary Policy∗ † ‡ Michael D. Bauer, Christopher J. Neely December 12, 2013 Abstract Previous research has established that the Federal Reserve’s large scale asset purchases (LSAPs) significantly influenced international bond yields. We use dynamic term struc- ture models to uncover to what extent signaling and portfolio balance channels caused these declines. For the U.S. and Canada, the evidence supports the view that LSAPs had substantial signaling effects. For Australian and German yields, signaling effects were present but likely more moderate, and portfolio balance effects appear to have played a relatively larger role than in the U.S. and Canada. Portfolio balance effects were small for Japanese yields and signalin