The Interwar Housing Cycle in the Light of 2001-2011: A Comparative Historical Approach

摘要

The Financial crisis of 2008 to 2009 and the Great Recession it precipitated forced a rethinking among macroeconomists about the origin, prevention, and potential mitigation of such events. One of the conclusions emerging from a considered examination of the run-up to and the fallout from the events is the limitation of framing the policy issues solely in terms of whether Chairman Bernanke and the Federal Reserve System, as well as President Obama and the Congress, did the right thing when the crisis hit. Most observers believe that the response to the immediate crisis was correct in the sense that they believe that the appropriate remedy, once the seizing up of credit markets began, was indeed large scale fiscal and monetary stimulus.As the Fed reduced short- term rates close to the zero lower bound, it almost tripled the size of its balance sheet, and this ongoing monetary accommodation was augmented by the Treasury’s Troubled Asset Relief Program (TARP, October 2008) and, beginning in February of 2009, the fiscal stimulus associated with the American Recovery and Reinvestment Act (ARRA).1 The Republican takeover of the House of Representatives in the November 2010 midterm elections ended prospects for additional fiscal stimulus, at least from the expenditure side, but the Fed’s expansionary monetary stance continued as it sustained its expanded balance sheet, purchasing, through its programs of quantitative easing, longer term securities as some of the troubled assets acquired at the height of the crisis matured.Analysis of the appropriate response to the crisis drew inspiration from the experience of the country during the Great Depression. Two of the key policymakers, Christina Romer and Ben Bernanke, were both serious students of the Great Depression. Bernanke is famous for saying, at a 2002 conference honoring Milton Friedman on his 90th birthday, “Regarding the Great Depression, you’re right, we did it. We’re very sorry . . . we won’t do it again” (Bernanke 2002). Or to put it slightly more accurately, we won’t not do it again, since Friedman and Schwartz’s (1963) brief against the Fed was not their action, but their inaction in the face of bank failures and the consequent shrinkage in the country’s money supply.