August 2020

Monetary Policy and Economic Performance since the Financial Crisis

Dario Caldara, Etienne Gagnon, Enrique Martínez-García, and Christopher J. Neely


We review macroeconomic performance over the period since the Global Financial Crisis and the challenges in the pursuit of the Federal Reserve’s dual mandate. We characterize the use of forward guidance and balance sheet policies after the federal funds rate reached the effective lower bound. We also review the evidence on the efficacy of these tools and consider whether policymakers might have used them more forcefully. Finally, we examine the post-crisis experience of other major central banks with these policy tools.
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Keywords: Global Financial Crisis 2007–09, monetary policy, effective lower bound, structural changes, forward guidance, balance sheet policies.


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Last Update: August 27, 2020