One study that found evidence of the effectiveness of the Federal Reserve's emergency lending programs is a 2010 paper by economists Ben Bernanke, Mark Gertler, and Simon Gilchrist. The authors use a variety of econometric techniques to estimate the impact of the Federal Reserve's programs on the economy, and they find that these programs had a significant positive impact on output, employment, and inflation. For example, the authors estimate that the Federal Reserve's Term Asset-Backed Securities Loan Facility (TALF) increased GDP by 1-3 percent and created or saved 1-3 million jobs.
Another study that found evidence of the effectiveness of the Federal Reserve's emergency lending programs is a 2011 paper by economists John Campbell, Charles Calomiris, and Brenton Welch. The authors use a different set of econometric techniques than Bernanke, Gertler, and Gilchrist, but they also find that the Federal Reserve's programs had a significant positive impact on the economy. For example, the authors estimate that the Federal Reserve's Commercial Paper Funding Facility (CPFF) increased GDP by 2-3 percent and prevented the unemployment rate from rising by 2-3 percentage points.
However, some economists argue that the Federal Reserve's emergency lending programs were not effective or even made the crisis worse. For example, economist Richard Koo argues that the Federal Reserve's programs simply prolonged the crisis by keeping zombie companies afloat. Koo argues that the Federal Reserve should have instead allowed these companies to fail and reallocated their resources to more productive uses.
Overall, the evidence suggests that the Federal Reserve's emergency lending programs had a significant positive impact on the economy during the 2007-2009 financial crisis. However, some economists argue that these programs were not effective or even made the crisis worse.
