Fear of depression - Asymmetric monetary policy with respect to asset markets

Andreas Hoffmann ()

MPRA Paper from University Library of Munich, Germany

Abstract: The paper suggests that during Greenspan’s incumbency the fear of depression caused the Federal Reserve to lower interest rates rapidly when asset price developments suggested a crisis potential. Whereas, when asset markets were growth-supporting, it did not raise interest rates. This asymmetry contributed to a downward-trend in interest rates which pushed US interest rates down to zero in the current crisis.

Keywords: Fear of depression; Monetary policy; Taylor rule; Asset prices (search for similar items in EconPapers)
JEL-codes: E58 E52 D82 (search for similar items in EconPapers)
New Economics Papers: this item is included in nep-cba, nep-mac and nep-mon
Date: 2009-09-15
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Persistent link: http://EconPapers.repec.org/RePEc:pra:mprapa:17522

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