Monetary Policy in the 2008-2008 Recession
Year: 2009
Type: article
Abstract: The recession that began with a cyclical peak in December 2007 originated in a combination of real shocks because of a fall in housing wealth and a fall in real income from an increase in energy prices. The most common explanation for the intensification of the recession that began in the late summer of 2008 is the propagation of these shocks through dysfunction in credit markets. The alternative explanation offered in this article emphasizes propagation through contractionary monetary policy. The first explanation stresses the importance of credit-market interventions (credit policy). The second emphasizes the importance of money creation (money-creation policy). According to Federal Open Market Committee (FOMC) Chairman William McChesney Martin, \\"The System should always be engaged in a ruthless examination of its past record\\" (FOMC Minutes, 11/26/68, 1, 456).
Author: Robert L. Hetzel
Institutions: Federal Reserve, Federal Reserve Bank of Richmond
Language: English
Domain: Social Sciences
Open Access status: green
OpenAlex ID: W2160425839