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dc.contributor.authorRamaswamy, R.
dc.date.accessioned2018-06-22T11:12:41Z
dc.date.available2018-06-22T11:12:41Z
dc.date.issued2018-04-04
dc.identifier.otherCWPE1824
dc.identifier.urihttps://www.repository.cam.ac.uk/handle/1810/277389
dc.description.abstractThe Lehman failure precipitated the Great Recession and forced economic policy into unchartered terrain. This paper provides a retrospective on the policy response and links to the underwhelming economic recovery. The exposition is kept non-technical to facilitate wider access. Contrary to perceptions that banks remain vulnerable, this paper argues that regulation strengthened U.S. banks across a variety of dimensions. The deleveraging involved in the transition to stronger banks tightened financial conditions and offset the significant monetary stimulus. The failure to fully capture these offsetting policy forces explains the systematic forecasting errors—both markets and the Fed have consistently overestimated the strength of the economic cycle. Quantitative Easing resulted in a ballooning of excess reserves in the banking system, but payment of interest on excess reserves helped bank recapitalisation. The combination of stronger banks and excess reserves has the potential, unlike in previous cycles, to drive a late cycle surge in growth.
dc.publisherFaculty of Economics
dc.relation.ispartofseriesCambridge Working Papers in Economics
dc.rightsAll Rights Reserveden
dc.rights.urihttps://www.rioxx.net/licenses/all-rights-reserved/en
dc.subjectQuantitative Easing
dc.subjectfinancial regulation
dc.subjectdeleveraging
dc.titleA Decade After Lehman: Taking Stock of Quantitative Easing and Regulation
dc.typeWorking Paper
dc.identifier.doi10.17863/CAM.24682


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