NBER WORKING PAPER SERIES

THE FINANCIAL CRISIS AND THE POLICY RESPONSES:
AN EMPIRICAL ANALYSIS OF WHAT WENT WRONG
John B. Taylor
Working Paper 14631 http://www.nber.org/papers/w14631 NATIONAL BUREAU OF ECONOMIC RESEARCH
1050 Massachusetts Avenue
Cambridge, MA 02138
January 2009

I am grateful to John Cogan, Angelo Melino, John Murray, George Shultz and participants in the Global
Markets Working Group for helpful comments and suggestions. The views expressed herein are those of the author(s) and do not necessarily reflect the views of the National Bureau of Economic Research.
NBER working papers are circulated for discussion and comment purposes. They have not been peerreviewed or been subject to the review by the NBER Board of Directors that accompanies official
NBER publications.
© 2009 by John B. Taylor. All rights reserved. Short sections of text, not to exceed two paragraphs, may be quoted without explicit permission provided that full credit, including © notice, is given to the source.

The Financial Crisis and the Policy Responses: An Empirical Analysis of What Went Wrong
John B. Taylor
NBER Working Paper No. 14631
January 2009
JEL No. E0,G01
ABSTRACT
This paper is an empirical investigation of the role of government actions and interventions in the financial crisis that flared up in August 2007. It integrates and summarizes several ongoing empirical research projects with the aim of learning from past policy. The evidence is presented in a series of charts which are backed up by statistical analysis in these research projects.

John B. Taylor
Herbert Hoover Memorial Building
Stanford University
Stanford, CA 94305-6010 and NBER
John.Taylor@stanford.edu

The Financial Crisis and the Policy Responses:
An Empirical Analysis of What Went Wrong
John B. Taylor
November 2008

What caused the financial crisis? What prolonged it? Why did it worsen so dramatically