Munich Personal RePEc Archive

An Analysis of the 2008 Subprime Mortgage Crisis: Causes, Effects and Policy Response

Naape, Baneng (2020): An Analysis of the 2008 Subprime Mortgage Crisis: Causes, Effects and Policy Response.

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Abstract

This essay scrutinized the effects of Quantitative Easing (QE) on selected macroeconomic and financial variables. By means of a desktop approach, we find that QE1 had a strong and beneficial impact on the real economy through credit easing whereas QE2 and QE3 had small positive or neutral effects on banks and life Insurers. Although QE did not close the gap left by the 2008 global financial crisis, it helped reduce the rate at which the crisis was rising and proved to be an effective crisis management tool. QE boosts the economy in the short run but weakens the economy in the long run.

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