Monetary Policy Bubble

In their paper entitled "Monetary Policy and the Housing Bubble," the authors analyze the causes of the financial crisis and those responsible for it. The list of possible culprits includes the Federal Reserve, government regulators, credit rating agencies, entities that granted subprime loans and also those that requested them. Other potential culprits identified have included everything from global capital imbalances to the obsolete regulatory structures of Monetary Policy. The real causes of the financial crisis, which in his opinion has its origin in a too flexible monetary policy and in the global imbalances of capital, the liberalization of the banking systems, which allowed the banks to carry out more stock operations, have not been well studied. and on the other hand, the conduction of monetary policy carried out by the Federal Reserve, to reduce interest rates

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They used a vector¬ autoregressive model and Taylor's rule to analyze it. In macroeconomics one of the factors that contributed to the crisis was the stiff competition between the financial markets of London and New York to relax their regulations, something that.

Low-interest rates boosted the credit and real estate market boom. Investment expenditure on housing stimulated the activity of other sectors and became one of the activities that contributed greatly to the recovery of the North American economy, which peaked in 2004. Sponsored by low-interest rates, house prices grew rapidly. This revaluation of real estate had another effect on mortgages that were mostly contracted at a fixed rate. It was attractive to refinance a debt to agree to a lower rate and obtain a loan of a greater amount to acquire another house or, what great part of the families residing in the USA. they did, increase the consumption of goods and