Crisis and Responses: The Federal Reserve and the Financial Crisis of 2007-2008

25 Pages Posted: 30 Jun 2008 Last revised: 16 Aug 2010

See all articles by Stephen G. Cecchetti

Stephen G. Cecchetti

Brandeis International Business School; National Bureau of Economic Research (NBER); Centre for Economic Policy Research (CEPR)

Date Written: June 2008

Abstract

Realizing that their traditional instruments were inadequate for responding to the crisis that began on 9 August 2007, Federal Reserve officials improvised. Beginning in mid-December 2007, they implemented a series of changes directed at ensuring that liquidity would be distributed to those institutions that needed it most. Conceptually, this meant America's central bankers shifted from focusing solely on the size of their balance sheet, which they use to keep the overnight interbank lending rate close to their chosen target, to manipulating the composition of their assets as well. In this paper, I examine the Federal Reserve's conventional and unconventional responses to the financial crisis of 2007-2008.

Suggested Citation

Cecchetti, Stephen G., Crisis and Responses: The Federal Reserve and the Financial Crisis of 2007-2008 (June 2008). NBER Working Paper No. w14134. Available at SSRN: https://ssrn.com/abstract=1152675

Stephen G. Cecchetti (Contact Author)

Brandeis International Business School ( email )

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National Bureau of Economic Research (NBER) ( email )

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Cambridge, MA 02138
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212-720-8629 (Phone)
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Centre for Economic Policy Research (CEPR) ( email )

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