Review

This article is a modified version of a presentation given at the Federal Reserve Bank of Philadelphia’s policy forum "Policy Lessons from the Economic and Financial Crisis," December 4, 2009. The presentation was made during a panel discussion that also included John Taylor and N. Gregory Mankiw.

This article reviews the role of monetary and fiscal policy in the financial crisis and draws lessons for future macroeconomic policy. It shows that policy deviated from what had worked well in the previous two decades by becoming more interventionist, less rules-based, and less predictable.

This article is an edited transcription of remarks given at the Federal Reserve Bank of Philadelphia’s policy forum "Policy Lessons from the Economic and Financial Crisis," December 4, 2009. The presentation was made during a panel discussion that also included James Bullard and John Taylor.

The authors reexamine the relationship between quality of public schools and house prices and find it to be nonlinear. Unlike most studies in the literature, they find that the price premium parents must pay to buy a house in an area associated with a better school increases as school quality increases.

The authors investigate the relationship between the quality of institutions and output volatility. Using instrumental variable regressions, they address whether higher entry barriers and lower property rights protection lead to higher volatility.