Working Paper: NBER ID: w14631
Authors: John B. Taylor
Abstract: This paper is an empirical investigation of the role of government actions and interventions in the financial crisis that flared up in August 2007. It integrates and summarizes several ongoing empirical research projects with the aim of learning from past policy. The evidence is presented in a series of charts which are backed up by statistical analysis in these research projects.
Keywords: financial crisis; policy responses; government interventions
JEL Codes: E0; G01
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| Government interventions (E65) | Financial crisis (G01) |
| Federal Reserve's low interest rate policy (E52) | Housing boom (R31) |
| Low interest rates (E43) | Housing boom (R31) |
| Deviation from Taylor rule (E43) | Housing boom (R31) |
| Housing boom (R31) | Housing bust (R31) |
| Misdiagnosing underlying problems in credit markets (E44) | Prolonged crisis (H12) |
| Inappropriate policy responses (E65) | Prolonged crisis (H12) |
| Ad hoc interventions (H84) | Worsened situation (H84) |