Economics, Econometrics and Finance
4 years ago

Subprime Mortgages, Not Liquidity, Blamed for Financial Crisis Impact.

RePEc: Research Papers in Economics
Flight to What? — Dissecting Liquidity Shortages in the Financial Crisis
Feng Dong, Yi Wen

Paper Summary

The financial crisis was caused by a drop in the quality of private assets, not a lack of liquidity. Public intervention with too much money during a crisis can harm the economy by reducing capital investment.

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