A QUANTIFICATION OF THE 2008-2009 US BAILOUT PACKAGE
A QUANTIFICATION OF THE 2008-2009 US BAILOUT PACKAGE
Author(s): Cicero LimbereaSubject(s): Economy
Published by: Editura Universităţii »Alexandru Ioan Cuza« din Iaşi
Keywords: credit crunch; M1; M3; ISLM equilibrium; demand shock; Keynesian multiplier; monetary policy; fiscal policy; mortgage prepayments changes; MBS; velocity of money supply; long term equilibrium of exchange rates
Summary/Abstract: By examining the credit crunch causes and effects, this paper reflects on the necessity of the banks bailout package and its alternatives and quantifies a maximum non-inflationary bailout amount which is unlikely to cause permanent adjustments in the long term (trade-weighted) exchange rate equilibrium level of the US dollar. Furthermore it determines that the current bailout amounts are less than the maximum non-inflationary bailout amount and determines that to resolve the underlying credit crunch problem, an increase in non-bank bailout M1 and/or a tax reduction is necessary.
Journal: Review of Economic and Business Studies (REBS)
- Issue Year: 2009
- Issue No: 3
- Page Range: 127-136
- Page Count: 10
- Language: English
