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What lessons from the 1930s?
By:Cinzia Alcidi
Published on 2009 by CEPS

|This paper explores three areas in which the experience of the Great Depression might be relevant today: monetary policy, fiscal policy and the systemic stability of the banking system. We confirm the consensus on monetary policy: deflation must be avoided. With regard to fiscal policy, the picture is less clear. We cannot confirm a widespread opinion according to which fiscal policy did not work because it was not tried. We find that fiscal policy went to the limit of what was possible within the confines of sustainability, as they existed then. Our investigation of the US banking system shows a surprising resilience of the sector: commercial banking operations (deposit-taking and lending) remained profitable even during the worst years. This suggests one policy conclusion: At present the authorities in both the US and Europe have little choice but to make up for the losses on 'legacy' assets and wait for banks to earn back their capital. But to prevent future crises of this type, one should make sure that losses from the investment banking arms cannot impair commercial banking operations. At least a partial separation of commercial and investment banking thus seems justified by the greater stability of commercial banking operations.|--Publisher.
This Book was ranked at 11 by Google Books for keyword Gold bloc.
Book ID of What lessons from the 1930s?'s Books is qA3ZHw17ujEC, Book which was written byCinzia Alcidihave ETAG "0qkJJ9l8Yxc"
Book which was published by CEPS since 2009 have ISBNs, ISBN 13 Code is 9789290798828 and ISBN 10 Code is 9290798823
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