The monetary policy of the Fed and the start of the Great Recession

The goal of this bachelor thesis is to analyse the monetary policy of the Federal Reserve System (Fed) from the beginning of the 1990s to the years after the burst of the Dot-com bubble. On the ground of this, the thesis tries to answer the question whether the monetary policy of Fed caused the Great Recession. The first chapter deals with the general characterization of the US economy, the monetary policy and the Dot-com bubble. The conclusion is, that the monetary policy was extremely successful, because it reached its goals of stabilization of the macroeconomic indicators. The second part of this thesis describes briefly the circumstances of the origin of the crisis and its next progress.In this part I identified the burst of the housing bubble as the main factor of the start of the Great Recession. The third chapter deals with the main causes of the crisis, mainly with the burst of the housing bubble, new trends at the financial markets and the role of monetary policy. I compared the opinions of John Taylor with the stance of the defenders of Fed and came to a conclusion, that monetary policy is not the main fault of the Great Recession. The Taylor rule has many weak points and according to alternative simulations of the economic development, that housing bubble would have risen to the same size, if the Fed had followed the Taylor rule. The main cause of the crisis is the boom of the shadow banking system.