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The Federal Reserve as Lender of Last Resort During the Subprime Crisis – Successful Stabilisation Without Structural Changes

Listed author(s):
  • Hansjörg HERR

    ()

    (Berlin School of Economics and Law (HWR), Germany.)

  • Sina RÜDIGER

    ()

    (Berlin School of Economics and Law (HWR), Germany.)

  • Jennifer Pédussel WU

    ()

    (Berlin School of Economics and Law (HWR), Germany.)

Registered author(s):

    This paper studies the actions of the U.S. Federal Reserve Bank (FRB) during the financial crisis from 2007-2012 rating the performance of the Federal Reserve during the crisis. The chosen scoring model approach shows that the average performance of five specific measures taken by the FRB only ranks between fair and good. Comparing Stiglitz (2010) viewpoints with those of the FRB, this paper analyses several policies and events and argues that the resulting decisions were well intentioned but that the outcome was different from expectations because of missing regulations and restrictions. Furthermore, the structure of the FRB is examined and criticized.

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    File URL: http://www.kspjournals.org/index.php/JEPE/article/download/776/854
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    Article provided by KSP Journals in its journal Journal of Economics and Political Economy.

    Volume (Year): 3 (2016)
    Issue (Month): 2 (June)
    Pages: 192-210

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    Handle: RePEc:ksp:journ1:v:3:y:2016:i:2:p:192-210
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    1. Gadi Barlevy, 2007. "Economic theory and asset bubbles," Economic Perspectives, Federal Reserve Bank of Chicago, issue Q III, pages 44-59.
    2. Christopher J. Waller, 2011. "Independence + accountability: why the Fed is a well-designed central bank," Review, Federal Reserve Bank of St. Louis, issue Sep, pages 293-302.
    3. Daniel Detzer & Hansjorg Herr, 2014. "Theories of Financial Crises," Working papers wpaper25, Financialisation, Economy, Society & Sustainable Development (FESSUD) Project.
    4. Milgrom, Paul & Stokey, Nancy, 1982. "Information, trade and common knowledge," Journal of Economic Theory, Elsevier, vol. 26(1), pages 17-27, February.
    5. Harris Dellas & George S. Tavlas, 2011. "The fatal flaw: the revived Bretton-woods system, liquidity creation, and commodity-price bubbles," Working Papers 122, Bank of Greece.
    6. Jeremy J. Siegel, 2003. "What Is an Asset Price Bubble? An Operational Definition," European Financial Management, European Financial Management Association, vol. 9(1), pages 11-24.
    7. Milka Kazandziska, 2015. "Macroeconomic policy regime in Poland," Working Papers 59/2015, Institute of Economic Research, revised Apr 2015.
    8. Robert Guttmann, 2009. "Asset Bubbles, Debt Deflation, and Global Imbalances," International Journal of Political Economy, M.E. Sharpe, Inc., vol. 38(2), pages 46-69, July.
    9. Harris Dellas and George S. Tavlas, 2011. "The Revived Bretton Woods System, Liquidity Creation, and Asset Price Bubbles," Cato Journal, Cato Journal, Cato Institute, vol. 31(3), pages 485-495, Fall.
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