Ayse Kaya

What were they thinking? The Federal Reserve in the run-up to the 2008 financial crisis

ABSTRACT The Federal Reserve (the Fed) is responsible for monitoring, analyzing and ultimately stabilizing US financial markets. It also has unrivalled access to economic data, high-level connections to financial institutions, and a large staff of professionally trained economists. Why then was it apparently unconcerned by the financial developments that are now widely recognized to have caused the 2008 financial crisis? Using a wide range of Fed documents from the pre-crisis period, particularly the transcripts of meetings of the Federal Open Market Committee (FOMC), this paper shows that Fed policymakers and staff were aware of relevant developments in financial markets, but paid infrequent attention to them and disregarded significant systemic threats. Drawing on literatures in economics, political science and sociology, the paper then demonstrates that the Feds intellectual paradigm in the years before the crisis focused on ‘post hoc interventionism’ – the institutions ability to limit the fallout should a systemic disturbance arise. Further, the paper argues that institutional routines played a crucial role in maintaining this paradigm and in contributing to the Feds inadequate attention to the warning signals in the pre-crisis period.

Why Global Inequality Matters: Derivative Global Egalitarianism:

This article integrates empirical and normative discussions about why global economic inequalities matter in critically examining an approach known as derivative global egalitarianism (DGE). DGE is a burgeoning perspective that opposes excessive global economic inequality not based on the intrinsic value of equality but inequalitys negative repercussions on other values. The article aims to advance the research agenda by identifying and critically evaluating four primary varieties of DGE arguments from related but distinct literatures, which span a number of disciplines, including economics, international relations, and political philosophy. Overall, DGE offers a number of persuasive arguments as to why current levels of global inequality are of concern, but aspects of DGE beg further philosophical and empirical examination. By situating DGE within the wider theoretical and empirical contexts, this article provides resources for its critical assessment and theoretical development.