Understanding the Interventionist Impulse of the Modern Central Bank
7 Pages Posted: 30 Mar 2013
Date Written: June 15, 2012
Abstract
The financial crisis of 2007 and 2008 was a watershed event for the Federal Reserve and other central banks. The extraordinary actions they took have been described, alternatively, as a natural extension of monetary policy to extreme circumstances or as a problematic exercise in credit allocation. I have expressed my view elsewhere that much of the Fed’s response to the crisis falls in the latter category rather than the former (Lacker 2010). Rather than reargue that case, I want to take this opportunity to reflect on some of the institutional reasons behind the prevailing propensity of many modern central banks to intervene in credit markets.
Keywords: federal reserve bank, US central banking system, financial crisis, great recession, inflation, monetary policy, federal economic policy
JEL Classification: E50, E51, E52, E58
Suggested Citation: Suggested Citation
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