As the world marks the 10th anniversary of the Lehman Brothers collapse, each economist, politician and commentator seems to have his own questions. Here’s mine: How have central banks’ unprecedented efforts to rescue us from financial oblivion worked? Not “how well,” mind you. Just “how.”
The technical term for this “how” is transmission, which covers the practical means through which a central bank’s reduction of a policy rate or purchase of a bond can affect activity on Main Street. Citizens conditioned to respect the godlike...