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The Financial Crisis: Toward an Explanation and Policy Response

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  • Aaron Steelman
  • John A. Weinberg

Abstract

This article discusses the key events of the financial crisis, examines which factors contributed to it, and considers how policymakers might most effectively respond. At the core of their discussion is the role that explicit and implicit government guarantees played in encouraging unwise risk-taking by financial institutions.

Suggested Citation

  • Aaron Steelman & John A. Weinberg, 2015. "The Financial Crisis: Toward an Explanation and Policy Response," Economic Quarterly, Federal Reserve Bank of Richmond, issue 1Q, pages 5-21.
    • Handle: RePEc:fip:fedreq:00026
    DOI: 10.21144/eq1010102
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    File URL: https://www.richmondfed.org/-/media/richmondfedorg/publications/research/economic_quarterly/2015/q1/2008.pdf
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    References listed on IDEAS

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    4. Douglas W. Diamond & Philip H. Dybvig, 2000. "Bank runs, deposit insurance, and liquidity," Quarterly Review, Federal Reserve Bank of Minneapolis, vol. 24(Win), pages 14-23.
    5. Douglas W. Diamond & Raghuram G. Rajan, 2009. "The Credit Crisis: Conjectures about Causes and Remedies," American Economic Review, American Economic Association, vol. 99(2), pages 606-610, May.
    6. Franklin R. Edward, 1999. "Hedge Funds and the Collapse of Long-Term Capital Management," Journal of Economic Perspectives, American Economic Association, vol. 13(2), pages 189-210, Spring.
    7. Thomas M. Humphrey, 1989. "Lender of last resort: the concept in history," Economic Review, Federal Reserve Bank of Richmond, vol. 75(Mar), pages 8-16.
    8. Marvin Goodfriend & Jeffrey M. Lacker, 1999. "Limited commitment and central bank lending," Economic Quarterly, Federal Reserve Bank of Richmond, issue Fall, pages 1-27.
    9. Harold L. Cole & Lee E. Ohanian, 2004. "New Deal Policies and the Persistence of the Great Depression: A General Equilibrium Analysis," Journal of Political Economy, University of Chicago Press, vol. 112(4), pages 779-816, August.
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    Cited by:

    1. Fang, Libing & Yu, Honghai & Li, Lei, 2017. "The effect of economic policy uncertainty on the long-term correlation between U.S. stock and bond markets," Economic Modelling, Elsevier, vol. 66(C), pages 139-145.

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