Please use this identifier to cite or link to this item: http://hdl.handle.net/10419/26495
Authors: 
Heinemann, Frank
Year of Publication: 
2008
Series/Report no.: 
CESifo working paper 2450
Abstract: 
This brief exposition suggests that the Federal Reserve System temporarily guarantee a lower bound on stock prices in order to escape the current combination of liquidity trap and credit crunch. It shortly discusses reasons for this measure, consequences, and some alternatives. It is meant as a policy suggestion in case the recapitalization of banks, agreed upon in mid-October 2008, turns out to be insufficient for stabilizing financial markets and the downward spiral in asset prices resumes.
Subjects: 
Financial crisis
monetary policy
liquidity trap
credit crunch
asset markets
JEL: 
E52
E58
E31
E44
G21
Document Type: 
Working Paper

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