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A last thought to conclude. It took about 60 years to gain a true understanding of the causes and dynamics of the Great Depression. When it comes to this crisis, there is still a long way to go. Our insights into financial transmission mechanisms are partial at best. Although extreme times call for extreme measures, a crucial question is: how do we know whether our unconventional measures are the right ones? The Japanese crisis has taught us that delaying interventions can deepen a crisis. But we should not forget that excessive policies measures will likely do more harm than good, creating new vulnerabilities.
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