The Federal Reserve in times of economic crisis: Paths and choices since 2007
This paper studies the actions of the U.S. Federal Reserve Bank during the financial crisis from 2007-2012. Whereas the first two parts concentrate on asset bubble theory and the development of the housing bubble, the third part rates 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 Federal Reserve only ranks between fair and good. Comparing Stiglitz (2010) viewpoints with those of the Federal Reserve, this paper analyzes the federal funds rate, the bailout of AIG, the lending to Bear Stearns, the Term Auction Facility and the failure of Lehman Brothers. This paper 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 Federal Reserve is examined and criticized.
|Date of creation:||2013|
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- Robert Eisenbeis, 2010. "The Financial Crisis: Miss-Diagnosis and Reactionary Responses," Atlantic Economic Journal, Springer;International Atlantic Economic Society, vol. 38(3), pages 283-294, September.
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- Patricia S. Pollard, 2003. "A look inside two central banks: the European Central Bank and the Federal Reserve," Review, Federal Reserve Bank of St. Louis, issue Jan, pages 11-30.
- 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.
- Milka Kazandziska, 2015. "Macroeconomic policy regime in Poland," Working Papers 59/2015, Institute of Economic Research, revised Apr 2015.
- Hyman P. Minsky, 1992. "The Financial Instability Hypothesis," Economics Working Paper Archive wp_74, Levy Economics Institute.
- 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.
- Peter M. Summers, 2005. "What caused the Great Moderation? : some cross-country evidence," Economic Review, Federal Reserve Bank of Kansas City, issue Q III, pages 5-32. Full references (including those not matched with items on IDEAS)
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