The Aftermath of Financial Crises
by Carmen Reinhart and Kenneth S. Rogoff
in Harvard University Working Paper, December 2008

This paper presents a comparative historical analysis that is focused on the aftermath of systemic banking crises. This study of the aftermath of severe financial crises includes a number of recent emerging market cases to expand the relevant set of comparators. Also included in the comparisons are two prewar developed country episodes for which w...  

Bankers’ Acceptances: Yesterday’s Instrument to Restart Today's Credit Markets?
by Richard G. Anderson
in Federal Reserve Bank of St. Louis Economic Synopses, January 2009

This note suggests considering an old—not new—financial market instrument: bankers’ acceptances. Bankers’ acceptances are one of the world’s older financial instruments, used as early as the twelfth century. Bankers’ acceptances have a long history in the Federal Reserve. Bankers’ acceptances are an old idea whose time may have returned—but with c...  

Banking Crises: An Equal Opportunity Menace
by Carmen M. Reinhart and Kenneth S. Rogoff
in Harvard University Working Paper, December 2008

The historical frequency of banking crises is quite similar in high- and middle-to-low income countries, with quantitative and qualitative parallels in both the run-ups and the aftermath. The authors establish these regularities using a unique dataset spanning from Denmark’s financial panic during the Napoleonic War to the ongoing global financial ...  

The Crisis through the Lens of History
by Charles Collyns
in International Monetary Fund: Finance and Development, December 2008

The current financial crisis is ferocious, but history shows the way to avoid another Great Depression

The Current Financial Crisis: What Should We Learn from the Great Depressions of the Twentieth Century?
by Gonzalo Fernández de Córdoba and Timothy J. Kehoe
in Federal Reserve Bank of Minneapolis Staff Report, March 2009

Studying the experience of countries that have experienced great depressions during the twentieth century teaches us that massive public interventions in the economy to maintain employment and investment during a financial crisis can, if they distort incentives enough, lead to a great depression.

The Evolution of the Subprime Mortgage Market
by Souphala Chomsisengphet and Anthony Pennington-Cross
in Federal Reserve Bank of St. Louis Review, January 2006

This paper describes subprime lending in the mortgage market and how it has evolved through time. Subprime lending has introduced a substantial amount of risk-based pricing into the mortgage market by creating a myriad of prices and product choices largely determined by borrower credit history (mortgage and rental payments, foreclosures and bankru...  

The Federal Reserve’s Commercial Paper Funding Facility
by Tobias Adrian, Karin Kimbrough, and Dina Marchioni
in Federal Reserve Bank of New York Staff Reports, January 2010

The Federal Reserve created the Commercial Paper Funding Facility (CPFF) in the midst of severe disruptions in money markets following the bankruptcy of Lehman Brothers on September 15, 2008. The CPFF finances the purchase of highly rated unsecured and asset-backed commercial paper from eligible issuers via primary dealers. The facility is a liquid...  

Financial Statistics for the United States and the Crisis: What Did They Get Right, What Did They Miss, and How Should They Change?
by Matthew J. Eichner, Donald L. Kohn, and Michael G. Palumbo
in Board of Governors Finance and Economics Discussion Series, April 2010

Although the instruments and transactions most closely associated with the financial crisis of 2008 and 2009 were novel, the underlying themes that played out in the crisis were familiar from previous episodes: Competitive dynamics resulted in excessive leverage and risktaking by large, interconnected firms, in heavy reliance on short-term sourc...  

The Global Credit Crisis as History
by Barry Eichengreen
in University of California Berkeley Polcy Paper, December 2008

During the Great Depression the Fed waited too long to execute its responsibilities as a lender of last resort, thus allowing the banking system to collapse. This time, there has been little hesitation on the part of the Fed to act, which leaves two questions: Why, given that this is a global credit crisis, have policy makers in other countries fai...  

The Global Recession
by Craig P. Aubuchon and David C. Wheelock
in Federal Reserve Bank of St. Louis Economic Synopses, May 2009

Presents information on the percentage of economies around the world that are in recession, and offers comparisons with previous economic declines.

An Historical Perspective on the Crisis of 2007-2008
by Michael D. Bordo
in Bank of Chile Conference, November 2008

The current international financial crisis is part of a perennial pattern. Today’s events have echoes in earlier big international financial crises which were triggered by events in the U.S. financial system. Examples include the crises of 1857,1893, 1907 and 1929-1933. This crisis has many similarities to those of the past but also some important ...  

Interest on Excess Reserves as a Monetary Policy Instrument: The Experience of Foreign Central Banks
by David Bowman, Etienne Gagnon, and Mike Leahy
in Board of Governors International Finance Discussion Papers, March 2010

This paper reviews the experience of eight major foreign central banks with policy interest rates comparable to the interest rate on excess reserves paid by the Federal Reserve. We pursue two main lines of inquiry: 1) To what extent have these policy interest rates been lower bounds for short-term market rates, and 2) to what extent has tighteni...  

Lessons Learned from the Financial Crisis
by William C. Dudley
in Speech, June 2009

In assessing the lessons of the past two years, Dudley focuses on five broad themes that are interrelated: Interconnectedness of the financial system; System dynamics—How does the system respond to shocks?; Incentives—Can we improve outcomes by changing incentives?; Transparency; How should central banks respond to asset bubbles?

The Longer-Term Challenges Ahead
by William C. Dudley
in Federal Reserve Bank of New York Speech, March 2010

Remarks at the Council of Society Business Economists Annual Dinner, London, United Kingdom

Monetary Policy in the Crisis: Past, Present, and Future
by Donald L. Kohn
in Board of Governors Speech, January 2010

Speech given at the Brimmer Policy Forum, American Economic Association Annual Meeting, Atlanta, Georgia

More Lessons from the Crisis
by William C. Dudley
in Federal Reserve Bank of New York Speech, November 2009

Remarks at the Center for Economic Policy Studies Symposium

Questions and Answers about the Financial Crisis
by Gary Gorton
in Prepared Testimony for the U.S. Financial Crisis Inquiry Commission, February 2010

All bond prices plummeted (spreads rose) during the financial crisis, not just the prices of subprimerelated bonds. These price declines were due to a banking panic in which institutional investors and firms refused to renew sale and repurchase agreements (repo) – short?term, collateralized, agreements that the Fed rightly used to count as money...  

The Response of the Federal Reserve to the Recent Banking and Financial Crisis
by Randall S. Kroszner and William Melick
in Chicago Booth School of Business Working Paper, December 2009

The authors present an account of the policy actions taken by the Fed, providing a narrative that brings together information that otherwise requires consulting a variety of sources. They also present a framework for thinking about the central bank policy response that gives the reader a means of organizing her own understanding of the response. A...  

Slapped in the Face by the Invisible Hand: Banking and the Panic of 2007
by Gary B. Gorton
in SSRN Paper, May 2009

The 'shadow banking system' at the heart of the current credit crisis is, in fact, a real banking system – and is vulnerable to a banking panic. Indeed, the events starting in August 2007 are a banking panic. A banking panic is a systemic event because the banking system cannot honor its obligations and is insolvent. Unlike the historical banking p...  

Stock-Market Crashes and Depressions
by Robert J. Barro and José F. Ursúa
in NBER Working Paper (requires subscription), February 2009

Long-term data for 25 countries up to 2006 reveal 195 stock-market crashes (multi-year real returns of -25% or less) and 84 depressions (multi-year macroeconomic declines of 10% or more), with 58 of the cases matched by timing. The United States has two of the matched events--the Great Depression 1929-33 and the post-WWI years 1917-21, likely drive...  

Systemic Banking Crisis: A New Database
by Luc Laeven and Fabian Valencia
in IMF Working Paper, November 2008

This paper presents a new database on the timing of systemic banking crises and policy responses to resolve them. The database covers the universe of systemic banking crises for the period 1970-2007, with detailed data on crisis containment and resolution policies for 42 crisis episodes, and also includes data on the timing of currency crises and s...  

This Time is Different: A Panoramic View of Eight Centuries of Financial Crises
by Carmen M. Reinhart and Kenneth S. Rogoff
in Harvard University Working Paper, April 2008

This paper offers a “panoramic” analysis of the history of financial crises dating from England’s fourteenth-century default to the current United States sub-prime financial crisis. Our study is based on a new dataset that spans all regions. It incorporates a number of important credit episodes seldom covered in the literature, including for exampl...  

Using Monetary Policy to Stabilize Economic Activity
by Carl E. Walsh
in Federal Reserve Bank of Kansas City Symposium, August 2009

This essay examines the role of monetary policy in stabilizing real economic activity. The author discusses the consensus on monetary policy that developed over the last twenty years. He then examines monetary policy when the policy interest rate has fallen to zero. The paper also assess issues relevant for post-crisis monetary policy.

Where We Go from Here: The Crisis and Beyond
by Richard W. Fisher
in Federal Reserve Bank of Dallas Speech, March 2010

Remarks before the Eller College of Management, University of Arizona

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