Journal Article

Are All the Sacred Cows Dead? Implications of the Financial Crisis for Macro- and Financial Policies

Aslı Demirgüç-Kunt and Luis Servén

in The World Bank Research Observer

Published on behalf of World Bank

Volume 25, issue 1, pages 91-124
Published in print February 2010 | ISSN: 0257-3032
Published online February 2010 | e-ISSN: 1564-6971 | DOI: http://dx.doi.org/10.1093/wbro/lkp027
Are All the Sacred Cows Dead? Implications of the Financial Crisis for Macro- and Financial Policies

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  • Economics
  • Monetary Policy, Central Banking, and the Supply of Money and Credit
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The recent global financial crisis has shaken the confidence of industrial and developing countries alike in the very blueprint of the financial and macropolicies that underlie the Western capitalist systems. In an effort to contain the crisis from spreading, the authorities in the United States and many European governments have taken unprecedented steps of providing extensive liquidity, giving assurances to bank depositors and creditors that include blanket guarantees, structuring bail-out programs that include taking large ownership stakes in financial institutions, and establishing programs for direct provision of credit to nonfinancial institutions. Emphasizing the importance of incentives and tensions between short term and longer term policy responses to crisis management, the authors draw on a large body of research evidence and country experiences to discuss the implications of the current crisis for financial and macroeconomic policies going forward.

Keywords: G01; G21; G28; G32; E52; E58; F32

Journal Article.  14710 words. 

Subjects: Economics ; Monetary Policy, Central Banking, and the Supply of Money and Credit ; International Finance ; Financial Regulation ; Banking ; Corporate Governance

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