| Summary/Abstract |
Now, almost a decade after the Great Recession hit, the story of its origins and course has become familiar. It began in December 2007, soon after the U.S. housing bubble burst, triggering the widespread collapse of the U.S. financial system. Credit dried up, as banks lost confidence in the value of their assets and stopped lending to one another. Consumer spending plummeted. At first, the U.S. Federal Reserve tried to boost spending through traditional monetary policy [1], by reducing short-term interest rates. Yet this proved ineffective, even though short-term interest rates fell close to zero. The government then turned to fiscal stimulus [2], with Congress passing a package of tax cuts and spending increases in 2009, but this, too, proved ineffectual.
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