This paper discusses the conventional view that the main cause of the current crisis is the accommodative monetary policy followed by Greenspan’s Fed in the early 2000s. It assesses the merits and the drawbacks of this view by looking at the close relationship between the role of monetary...

One of the more debated interpretations of the economic crisis that started in 2007–08 is based on the 'Taylor rule' equation, namely the idea that over the period 2002–05 the Fed has implemented a low-interest policy that has led to the housing bubble and finally to the 'Great Recession'....