Saturday , June 15 2019
Home / Ben Bernanke
The author Ben Bernanke
Ben Bernanke
Ben S. Bernanke is a Distinguished Fellow in Residence with the Economic Studies Program at the Brookings Institution. From February 2006 through January 2014, he was Chairman of the Board of Governors of the Federal Reserve System. Dr. Bernanke also served as Chairman of the Federal Open Market Committee, the System's principal monetary policymaking body. He is also the author of The Courage to Act.

Ben Bernanke

Evaluating lower-for-longer policies: Temporary price-level targeting

By Ben S. Bernanke Despite a long and sustained recovery from the Great Recession, a number of factors—including an aging population, slow productivity growth, and subdued inflation—continue to exert downward pressure on U.S. interest rates. It seems likely that even when monetary policy is at a neutral setting, neither restraining nor stimulating the economy, interest rates will remain significantly lower than in recent decades. One consequence of a low-rate environment is that monetary...

Read More »

The housing bubble, the credit crunch, and the Great Recession: A reply to Paul Krugman

By Ben S. Bernanke Why was the Great Recession so deep? Certainly, the collapse of the housing bubble was the key precipitating event; falling house prices depressed consumer wealth and spending while leading to sharp reductions in residential construction. However, as I argue in a new paper and blog post, the most damaging aspect of the unwinding bubble was that it ultimately touched off a broad-based financial panic, including runs on wholesale funding and indiscriminate fire sales of even...

Read More »

Financial panic and credit disruptions in the 2007-09 crisis

By Ben S. BernankeAt the height of the financial crisis a decade ago, economists and policymakers underestimated the depth and severity of the recession that would follow. I argue in a paper released today by the Brookings Papers on Economic Activity (BPEA) that remedying this failure demands a more thorough inclusion of credit-market factors in models and forecasts of the economy. I also provide new evidence that suggests that the severity of the Great Recession reflected in large part the...

Read More »

Temporary price-level targeting: An alternative framework for monetary policy

By Ben S. BernankeLow nominal interest rates, low inflation, and slow economic growth pose challenges to central bankers. In particular, with estimates of the long-run equilibrium level of the real interest rate quite low, the next recession may occur at a time when the Fed has little room to cut short-term rates. As I have written previously and recent research has explored, problems associated with the zero-lower bound (ZLB) on interest rates could be severe and enduring. While the Fed has...

Read More »

When growth is not enough

By Ben S. BernankeHere is the text of my prepared remarks (“When Growth Is Not Enough”) for the European Central Bank Forum on Central Banking at Sintra on “Investment and growth in advanced economies.” Read my full remarks here.        

Read More »

Some reflections on Japanese monetary policy

By Ben S. Bernanke Over the years, I’ve done a lot thinking and writing about challenges faced by Japanese monetary policymakers in their attempts to combat deflation. In some of my earlier pieces I argued that, if the Bank of Japan (BOJ) showed more resolve, it could readily overcome these problems. But, in recent years, the Bank has shown great resolve, and while the results have generally been positive, deflation has not been decisively vanquished. In particular, the BOJ has had...

Read More »

The zero lower bound on interest rates: How should the Fed respond?

In yesterday’s post, I discussed recent research, by Michael Kiley and John Roberts of the Federal Reserve Board, on the problems for monetary policy that arise from the fact that short-term interest rates can’t fall (much) below zero. [1] Using econometric models to simulate the performance of the U.S. economy, Kiley and Roberts (KR) find that, under certain assumptions, in the future short-term interest rates could be at zero as much as 30 to 40 percent of the time, hobbling the ability of...

Read More »

How big a problem is the zero lower bound on interest rates?

If inflation is too low or unemployment too high, the Fed normally responds by pushing down short-term interest rates to boost spending. However, the scope for rate cuts is  limited by the fact that interest rates cannot fall (much) below zero, as people always have the option of holding cash, which pays zero interest, rather than negative-yielding assets. [1] When short-term interest rates reach zero, further monetary easing becomes difficult and may require unconventional monetary policy,...

Read More »

Why Dodd-Frank’s orderly liquidation authority should be preserved

The collapse of the investment bank Lehman Brothers in September 2008 was perhaps the defining event of the financial crisis. Lehman’s bankruptcy, followed by the near-collapse (save for government intervention) of the insurance company AIG, greatly intensified the fear and panic in markets, bringing the financial system and the economy to the brink of the abyss. These events, including the government’s response, remain controversial. What should not be controversial is that ordinary...

Read More »

Shrinking the Fed’s balance sheet

To help stabilize the financial system and promote economic recovery, starting in late 2008 the Federal Reserve purchased large quantities of financial assets, primarily Treasury securities and U.S. government-backed, mortgage-related securities. The policy of so-called quantitative easing (see here and here) expanded the Fed’s balance sheet from less than $900 billion before the crisis to about $4.5 trillion today—including about $2.5 trillion in Treasuries and $1.8 trillion in...

Read More »