Nuevo working paper junto a Bryan Cutsinger, Thomas Hogan, Alex Salter, y Will Luther. En esta ocasión estudiamos la respuesta de la Reserva Federal a la pandemia del Covid-19. En particular, llamamos la atención sobre la Reserva Federal haciendo política fiscal en lugar de política monetaria. Tendencia que se inicia al menos con la crisis sub-prime.
We provide an initial assessment of the Federal Reserve’s policy response to the COVID-19 contraction. We briefly review the historical episode and consider the standard textbook treatment of a pandemic on the macroeconomy. Then, we summarize the monetary and emergency lending policies pursued by the Fed. Finally, we consider the extent to which the Fed might be said to have promoted monetary stability over the period; whether its emergency lending facilities were warranted; and what, if any, consequences are likely to follow from these facilities. In brief, we credit the Fed with promoting monetary stability while maintaining that it could have (and should have) done more. It could have achieved something approximating monetary stability without employing its emergency lending facilities, but some of its facilities were intended to promote general liquidity and likely helped to that end. Other facilities were primarily intended to allocate credit and, thus, blur the line between monetary and fiscal policy. These credit allocation facilities were unwarranted and unwise.