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U.S. Monetary Policy and the Financial Crisis

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  • Lothian, James R.

Abstract

This paper reviews U.S. Federal Reserve policy prior to and during the course of the recession that began in December 2007. It compares those policies to monetary policy during the Great Depression of the 1930s with which this recession has been likened. It then goes on to discuss what policymakers will need to do to in the future to avoid a surge in inflation and the difficulties which they are apt to face in implementing the necessary shift in policy.

Suggested Citation

  • Lothian, James R., 2009. "U.S. Monetary Policy and the Financial Crisis," The Journal of Economic Asymmetries, Elsevier, vol. 6(3), pages 25-40.
    • Handle: RePEc:eee:joecas:v:6:y:2009:i:3:p:25-40
    DOI: 10.1016/S1703-4949(16)30050-0
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    References listed on IDEAS

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    1. Carr, Jack & Darby, Michael R., 1981. "The role of money supply shocks in the short-run demand for money," Journal of Monetary Economics, Elsevier, vol. 8(2), pages 183-199.
    2. Gandolfi, Arthur E & Lothian, James R, 1983. "International Price Behavior and the Demand for Money," Economic Inquiry, Western Economic Association International, vol. 21(3), pages 295-311, July.
    3. Allan H. Meltzer, 1963. "The Demand for Money: The Evidence from the Time Series," Journal of Political Economy, University of Chicago Press, vol. 71, pages 219-219.
    4. Lothian, James R. & Darby, Michael R. & Tindall, Michael, 1990. "Buffer stock models of the demand for money and the conduct of monetary policy," Journal of Policy Modeling, Elsevier, vol. 12(2), pages 325-345.
    5. Daniel L. Thornton, 2009. "The Fed, liquidity, and credit allocation," Review, Federal Reserve Bank of St. Louis, vol. 91(Jan), pages 13-22.
    6. Milton Friedman & Anna J. Schwartz, 1963. "A Monetary History of the United States, 1867–1960," NBER Books, National Bureau of Economic Research, Inc, number frie63-1, March.
    7. Dwyer, Gerald P. & Tkac, Paula, 2009. "The financial crisis of 2008 in fixed-income markets," Journal of International Money and Finance, Elsevier, vol. 28(8), pages 1293-1316, December.
    8. Gandolfi, Arthur E & Lothian, James R, 1976. "The Demand for Money from the Great Depression to the Present," American Economic Review, American Economic Association, vol. 66(2), pages 46-51, May.
    9. Rudiger Ahrend & Boris Cournède & Robert Price, 2008. "Monetary Policy, Market Excesses and Financial Turmoil," OECD Economics Department Working Papers 597, OECD Publishing.
    10. William T. Gavin, 2009. "More money: understanding recent changes in the monetary base," Review, Federal Reserve Bank of St. Louis, vol. 91(Mar), pages 49-60.
    11. Allan H. Meltzer, 2001. "The Transmission Process," Palgrave Macmillan Books, in: Deutsche Bundesbank (ed.), The Monetary Transmission Process, chapter 3, pages 112-130, Palgrave Macmillan.
    Full references (including those not matched with items on IDEAS)

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    Cited by:

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    2. Cronin, David, 2014. "The interaction between money and asset markets: A spillover index approach," Journal of Macroeconomics, Elsevier, vol. 39(PA), pages 185-202.
    3. Su, Chi-Wei & Pang, Lidong & Umar, Muhammad & Lobonţ, Oana-Ramona & Moldovan, Nicoleta-Claudia, 2022. "Does gold's hedging uncertainty aura fade away?," Resources Policy, Elsevier, vol. 77(C).

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    More about this item

    Keywords

    E32; E51; E52; N12; Macroeconomics; Money; Monetary policy; Business cycles; Great Depression;
    All these keywords.

    JEL classification:

    • E32 - Macroeconomics and Monetary Economics - - Prices, Business Fluctuations, and Cycles - - - Business Fluctuations; Cycles
    • E51 - Macroeconomics and Monetary Economics - - Monetary Policy, Central Banking, and the Supply of Money and Credit - - - Money Supply; Credit; Money Multipliers
    • E52 - Macroeconomics and Monetary Economics - - Monetary Policy, Central Banking, and the Supply of Money and Credit - - - Monetary Policy
    • N12 - Economic History - - Macroeconomics and Monetary Economics; Industrial Structure; Growth; Fluctuations - - - U.S.; Canada: 1913-

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