An Analysis of the 2008 Global Financial Crisis: A Desktop Approach

Naape, Baneng (2019): An Analysis of the 2008 Global Financial Crisis: A Desktop Approach.

Abstract

This essay aims to investigate the effects of Quantitative Easing (QE) on selected macroeconomic and financial market variables. By means of a desktop approach, we find that QE1 had a strong and beneficial impact on the real economy through the banking sector while 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. Thus, Central banks should only consider QE when the economy is in crisis and not as a substitution for structural reforms.

• Item Type: MPRA Paper
• Language: English
• Keywords: Quantitative Easing, Global Financial Crisis, economic downturn, Advanced Market Economies, Lower Interest Bound
• Subjects: E - Macroeconomics and Monetary Economics > E5 - Monetary Policy, Central Banking, and the Supply of Money and Credit; G - Financial Economics > G1 - General Financial Markets; G - Financial Economics > G1 - General Financial Markets > G14 - Information and Market Efficiency ; Event Studies ; Insider Trading

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