One aspect of the 2007-2009 financial panic was a run on some money market mutual funds (MMMFs). Plot weekly data for 2008 on institutional MMMF deposits (FRED code: WIMFSL) and identify the timing of the run visually. Next, download the data, and report the size of the deposit outflow in the week that the run peaked. Why did this run end?
Answer to relevant QuestionsWhen did the financial crisis of 2007-2009 peak and why? Plot weekly data for 2006–2010 for the one-week LIBOR rate (FRED code: USD1WKD156N) and the effective federal funds rate (FRED code: FF). Explain the pattern. Explain the link between falling house prices and bank failures during the financial crisis of 2007-2009.If banks’ fragility arises from the fact that they provide liquidity to depositors, as a bank manager, how might you reduce the fragility of your institution?How might the existence of the government safety net lead to increased concentration in the banking industry? Transparency is a key element of the monetary policy framework.a. Explain how transparency helps eliminate the problems that are created by central bank independence.b. In what way did the financial crisis of 2007-2009 ...
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