Effectiveness of the Transmission of Monetary Policies and Lessons Learned in 2007 and 2008 Global Financial Crisis.

Effectiveness of the Transmission of Monetary Policies and Lessons Learned in 2007 and 2008 Global Financial Crisis. Essay example
Masters
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Finance & Accounting
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The global financial crisis that occurred between 2007 and 2008 has resulted in various heated discussions among financial analysts regarding the role of monetary policy amidst various central banks in the world (Krugman, 2009)…

Introduction

It has also resulted in a number of debates as regards the effectiveness of the transmission mechanism of monetary policies. In the past, monetary policy has been associated with a financial stability of an economy. The problem that a majority of countries face is concerned with the effectual transmission mechanism of an effective monetary-policy. A number of lessons can be learned regarding the effectiveness of the transmission mechanism of monetary policy by central banks in the year 2007 and 2008. The lessons would be based on interest rate, inflation, exchange rates, balance sheet, expectations, as well as moral hazards that characterized the market prior, during and after the 2008 global economic-crisis. A Brief State of the 2007 Financial Crisis and Failure of the Monetary Policy Transmission Mechanism Although financial crisis is not a unique occurrence, the financial crisis of 2007 was more global than other economic crises experienced in the past (Mankoff, 2010). ...
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