Investigators from University of Pennsylvania Target Economics (Credit Markets and the Visible Hand: the Discount Window and the Macroeconomy): Economics

2024 AUG 23 (NewsRx) -- By a News Reporter-Staff News Editor at NewsRx Policy and Law Daily -- Data detailed on Economics have been presented. According to news reporting out of Philadelphia, Pennsylvania, by NewsRx editors, research stated, “In times of crisis such as the 2008 financial crisis and the 2020 interventions with lasting effects on financial markets and the macroeconomy, for better and worse. The negative political consequences of these interventions-fears of politicizing central banking and inflationary concerns about dramatic interventions among them-can dampen the enthusiasm for such interventions early in the face of crisis.”

Our news journalists obtained a quote from the research from the University of Pennsylvania, “This dynamic creates a dilemma for the US central bank, the Federal Reserve, causing it to eschew interventions beyond monetary policy until the crisis has already crashed, at which point the Fed moves into every aspect of policy throughout the economy. This Article highlights the inadequacy of this dynamic. Sole reliance on monetary policy is insufficient in the face of growing crisis, while the Fed’s vast emergency lending facilities face ever stiffer political, inflationary, and equity concerns. The Article advocates instead for a new approach to macroeconomic stability, not just through monetary policy or emergency interventions, but through judicious use of the sleeping giant of Fed policy, the bank-intermediated discount window.”

According to the news editors, the research concluded: “Focusing on the problematic credit market for debtors-in-possession in the midst of bankruptcy, the Article suggests a reformed system that safeguards the Fed, supports small and medium-sized enterprises, and stabilizes the macroeconomy without exposing the system to the pockets of instability that the Fed’s overreliance on dramatic intervention can do.”

This research has been peer-reviewed.

For more information on this research see: Credit Markets and the Visible Hand: the Discount Window and the Macroeconomy. Yale Journal On Regulation, 2024;41(1). Yale Journal On Regulation can be contacted at: Yale Journal On Regulation, 127 Wall Street, New Haven, CT 06511, USA.

Our news journalists report that additional information may be obtained by contacting Peter Conti-Brown, University of Pennsylvania, Wharton School, Financial Regulat, Philadelphia, PA 19104, United States.

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