Working Paper: NBER ID: w2559
Authors: Mark Gertler
Abstract: This paper surveys literature which explores the possible links between the financial system and aggregate economic behavior. The survey is in two parts: The first reviews the traditional work and the second discusses new research.
Keywords: financial structure; aggregate economic activity; financial intermediation; credit supply
JEL Codes: E44; G21
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| Financial intermediaries (G23) | Aggregate economic activity (E10) |
| Financial contracts and institutions (G29) | Real economic variables (E39) |
| Balance sheet positions and cash flow (F32) | Spending decisions (H61) |
| Financial variables (G19) | Demand (R22) |
| Liabilities of failed banks (G33) | Output fluctuations (E39) |
| Spreads between risky and safe bond rates (E43) | Output fluctuations (E39) |
| Disruption of credit markets (F65) | Declines in real activity (E39) |