Unprecedented Actions: The Federal Reserve’s Response to the Global Financial Crisis in Historical Perspective

Frederic Mishkin and Eugene White ()

No 20737, NBER Working Papers from National Bureau of Economic Research, Inc

Abstract: Interventions by the Federal Reserve during the financial crisis of 2007-2009 were generally viewed as unprecedented and in violation of the rules—notably Bagehot’s rule—that a central bank should follow to avoid the time-inconsistency problem and moral hazard. Reviewing the evidence for central banks’ crisis management in the U.S., the U.K. and France from the late nineteenth century to the end of the twentieth century, we find that there were precedents for all of the unusual actions taken by the Fed. When these were successful interventions, they followed contingent and target rules that permitted pre-emptive actions to forestall worse crises but were combined with measures to mitigate moral hazard.

JEL-codes: E58 G01 N10 N20 (search for similar items in EconPapers)
Date: 2014-12
New Economics Papers: this item is included in nep-cba, nep-his, nep-hpe, nep-mac and nep-mon
Note: DAE EFG ME
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Citations: View citations in EconPapers (8)

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Working Paper: Unprecedented actions: the Federal Reserve’s response to the global financial crisis in historical perspective (2014)
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