Research on the Effectiveness of the American Financial Crisis Rescue Policy

Abstract

This paper studies the effectiveness of the monetary policy of the United States, before the financial crisis (2002.01–2007.08), the financial crisis period (2007.09–2014.10), and after the financial crisis (2014.11 2019.12), by using the vector autoregressive model (VAR), with the monthly federal funds rate of 2002–2019, M2, industrial gross domestic product, the consumer price index, total imports and exports, the Standard & Poor's 500 index, and the NYSE volume data as samples. Thus, to reflect the American financial crisis adopted a series of measures to the macroeconomic, foreign trade, and stock market rescue effect. The empirical results show that before the financial crisis, monetary policy was basically effective, but it also failed to restrain the overheating of the economy. During the financial crisis, monetary policy is ineffective, unable to stimulate economic development effectively. In the post-financial crisis period, the monetary policy of the United States can restore its effectiveness and promote the stable development of the economy, foreign trade, and stock market. From this point of view, during the financial crisis, the formulation and implementation of a series of policies in the United States effectively contained the worsening of the financial crisis and effectively rescued the American economy.