After reading the working paper entitled “Monetary Policy and the Housing Bubble”from Finance and Economics Discussion Series Divisions of Research & Statistics andMonetary Affairs Federal Reserve Board and analyzing all the relevant details, I assume thatthe authors' position regarding the role of US monetary policy and the housing market bubbleduring the early 2000's is that “monetary policy was well aligned with the goals ofpolicymakers and was not the primary contributing factor to the extraordinary strength inhousing markets” (Dokko et al., 2009, p. 2). The authors also confirmed that “We do find thatthe federal funds rate was below levels suggested by some simple policy rules during thisperiod” (Dokko et al., 2009, p. 2), which implies that they supported the actions that thegovernment had taken.From 1974 through 2002, institutional direct investment averaged around 412 basispoints of nominal GDP. Monetary policy was accommodative in the aftermath of the 2001recession. The federal funds rate was cut from 6.50 percent in December 2000 to 1.75 percent
