Are credit crunches supply or demand shocks?

Mohan Bijapur

LSE Research Online Documents on Economics from London School of Economics and Political Science, LSE Library

Abstract: This paper provides new insights into the relationship between the supply of credit and the macroeconomy. We present evidence that credit shocks constitute shocks to aggregate supply in that they have a permanent effect on output and cause inflation to rise in the short term. Our results also suggest that the effects on aggregate supply have grown stronger in recent decades.

Keywords: financial crisis; potential output; inflation; credit crunch (search for similar items in EconPapers)
JEL-codes: E31 E32 (search for similar items in EconPapers)
Pages: 20 pages
Date: 2013-06-26
New Economics Papers: this item is included in nep-mac
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Persistent link: https://EconPapers.repec.org/RePEc:ehl:lserod:56620

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