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Understanding the Interventionist Impulse of the Modern Central Bank

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  • Jeffrey M. Lacker

Abstract

The financial crisis of 2007 and 2008 was a watershed event for the Federal Reserve and other central banks. The extraordinary actions they took have been described, alternatively, as a natural extension of monetary policy to extreme circumstances, or as a problematic exercise in credit allocation. I have expressed my view elsewhere that much of the Fed's response to the crisis falls in the latter category rather than the former.1 Rather than reargue that case, I want to take this opportunity to reflect on some of the institutional reasons behind the prevailing propensity of many modern central banks to intervene in credit markets. As always, these remarks are my own and the views expressed are not necessarily shared by my colleagues on the Federal Open Market Committee.2
(This abstract was borrowed from another version of this item.)

Suggested Citation

  • Jeffrey M. Lacker, 2012. "Understanding the Interventionist Impulse of the Modern Central Bank," Cato Journal, Cato Journal, Cato Institute, vol. 32(2), pages 247-253, Spring/Su.
    • Handle: RePEc:cto:journl:v:32:y:2012:i:2:p:247-253
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    Cited by:

    1. Jordan, Jerry L. & Luther, William J., 2022. "Central bank independence and the Federal Reserve's new operating regime," The Quarterly Review of Economics and Finance, Elsevier, vol. 84(C), pages 510-515.
    2. Thomas F. Cargill & Gerald P. O'Driscoll Jr., 2013. "Federal Reserve Independence: Reality or Myth?," Cato Journal, Cato Journal, Cato Institute, vol. 33(3), pages 417-435, Fall.

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    JEL classification:

    • R00 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - General - - - General
    • Z0 - Other Special Topics - - General

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