Working Paper: CEPR ID: DP10511
Authors: Alan M. Taylor
Abstract: Since the 2008 global financial crisis, and after decades of relative neglect, the importance of the financial system and its episodic crises as drivers of macroeconomic outcomes has attracted fresh scrutiny from academics, policy makers, and practitioners. Theoretical advances are following a lead set by a fast-growing empirical literature. Recent long-run historical work has uncovered a range of important stylized facts concerning financial instability and the role of credit in advanced economies, and this article provides an overview of the key findings.
Keywords: banks; financial crisis; financial history; leverage; macroeconomic history; macroprudential policy; monetary policy; recessions
JEL Codes: E02; E31; E32; E42; E44; E51; E58; F32; F42; G01; G20; G28; N10; N20
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| Increases in bank lending relative to GDP (F65) | Financial crises (G01) |
| Financial crises (G01) | More severe recessions (F44) |
| Normal recessions (E32) | Less severe than financial crisis recessions (E32) |