This paper discusses the conventional view that the main cause of the current crisis is the accommodative monetary policy followed by Greenspan’s Fed in the early2000s. It assesses the merits and the drawbacks of this view by looking at the closerelationship between the role of monetary policy in modern economies, and its theoretical frame of reference, namely the New Consensus Macroeconomics (ncm)model. The paper concludes that there is little evidence that the monetary policiesin the early 2000s are the cause of the credit and house bubbles, which have then ledto the fnancial crisis.
From Maestro to Villain of Modern Monetary Policy: A Critical Assessment of the 'Greenspan Put' as the Main Cause of the Global Crisis
Brancaccio E
;FONTANA G
2011-01-01
Abstract
This paper discusses the conventional view that the main cause of the current crisis is the accommodative monetary policy followed by Greenspan’s Fed in the early2000s. It assesses the merits and the drawbacks of this view by looking at the closerelationship between the role of monetary policy in modern economies, and its theoretical frame of reference, namely the New Consensus Macroeconomics (ncm)model. The paper concludes that there is little evidence that the monetary policiesin the early 2000s are the cause of the credit and house bubbles, which have then ledto the fnancial crisis.File in questo prodotto:
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