Policy Response After the Great Financial Crisis

DOI

10.2991/aebmr.k.220307.454How to use a DOI?

Keywords

Great Financial Crisis; Great Recession; U.S; Monetary Policy; Fiscal Policy; Quantitative Easing; Forward Guidance; Troubled Asset Relief Program; TARP

Abstract

The Great Financial Crisis was the worst financial crisis since World War II, which plunged the global economy into a full-blown and sustained recession. This paper tries to explain the smooth but slow recovery after the crisis in the U.S. by evaluating the effectiveness and impact of three prime policy responses, including Quantitative Easing (QE), Forward Guidance (FG), and the Troubled Asset Relief Program (TARP). It is found that 1) QE helped the U.S. overcome the crisis by providing liquidity and stimulating consumption and investment, but some limitations made it not as effective as expected, which partly accounts for the slow recovery; 2) FG was helpful to the recovery through its explicit policy interpretation and additional information on economic conditions, but its impact was quite implicit and easily disturbed or overlapped by other policies; 3) the critical support of the TARP helped rebuild market confidence and reverse the deteriorating economic situation, but it created potential risks and shifted the pain from the present to the future.

Copyright

© 2022 The Authors. Published by Atlantis Press International B.V.

Open Access

This is an open access article under the CC BY-NC license.

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TY  - CONF
AU  - Jince Chen
AU  - Yuanyuan Li
AU  - Chengmai Zhang
AU  - Yufei Ye
PY  - 2022
DA  - 2022/03/26
TI  - Policy Response After the Great Financial Crisis
BT  - Proceedings of the 2022 7th International Conference on Financial Innovation and Economic Development (ICFIED 2022)
PB  - Atlantis Press
SP  - 2786
EP  - 2798
SN  - 2352-5428
UR  - https://doi.org/10.2991/aebmr.k.220307.454
DO  - 10.2991/aebmr.k.220307.454
ID  - Chen2022
ER  -