Are Credit Shocks Supply or Demand Shocks?

Mohan Bijapur

MPRA Paper from University Library of Munich, Germany

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)
Date: 2013-07-21
New Economics Papers: this item is included in nep-ban, nep-cba, nep-mac, nep-mon and nep-spo
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Persistent link: https://EconPapers.repec.org/RePEc:pra:mprapa:49005

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