The Impact of Policy Initiatives on Credit Spreads during the 2007-09 Financial Crisis

Alan Rai

International Journal of Central Banking, 2013, vol. 9, issue 1, 45-104

Abstract: This paper assesses the impact of the various “unconventional” U.S. Federal Reserve policies and fiscal policies, introduced during the 2007–09 financial crisis period, on credit market spreads. I also examine the impact of the “conventional” monetary policy stance, defined as the difference between the effective federal funds rate and the rate implied by a Taylor rule. Examining policies initiated between July 2007 and January 2009, I find that fiscal policy announcements did not, in general, reduce market spreads. I also find that while the multitude of “unconventional” monetary policy initiatives were effective in reducing market spreads, the effects were relatively modest. Finally, increases in the Taylor-rule residual are associated with an increase in credit market spreads.

JEL-codes: E52 E58 E63 G12 G14 (search for similar items in EconPapers)
Date: 2013
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (5)

Downloads: (external link)
http://www.ijcb.org/journal/ijcb13q1a3.pdf (application/pdf)
http://www.ijcb.org/journal/ijcb13q1a3.htm (text/html)

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:ijc:ijcjou:y:2013:q:1:a:3

Access Statistics for this article

International Journal of Central Banking is currently edited by Loretta J. Mester

More articles in International Journal of Central Banking from International Journal of Central Banking
Bibliographic data for series maintained by Bank for International Settlements ().