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The 2008 housing bubble and following great recession is considered as the greatest economic shock in the 2000s. The Fed Reserve had set an extremely loose monetary policy during 2002-2006, and it was considered as the main cause of the economic crisis by many economists. This paper examines the role of monetary policy in the US 2008 housing bubble through reviewing the papers written by Taylor J. and Bernanke C. The paper identifies their essential ideas and their demonstration methodologies. It also summarizes other factors that contribute to the housing bubble by researching the other scholars’ arguments.
Hanting Shen (Wed,) studied this question.