The fall in shadow banking and the slow U.S. recovery

Patrick Fève, Alban Moura and Olivier Pierrard

Journal of Economic Dynamics and Control, 2022, vol. 139, issue C

Abstract: We argue that shocks to traditional and shadow banks were important drivers of the U.S. economy during the Great Recession and the Slow Recovery. This result follows from a DSGE model featuring a heterogeneous banking sector estimated from macroeconomic and financial observables. Our model attributes the Great Recession to negative shocks to the aggregate supply of loans. A more novel result is that a shock specific to shadow bank intermediation accounts for much of the Slow Recovery. Therefore, our estimates suggest that accounting for the collapse of shadow banking after the financial crisis is important to explain the subdued path of GDP, investment, and inflation several years into the recovery.

Keywords: Shadow banking; Great recession; Slow recovery; Estimated DSGE models (search for similar items in EconPapers)
JEL-codes: C32 E32 (search for similar items in EconPapers)
Date: 2022
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (3)

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Related works:
Working Paper: Shadow banking and the Great Recession: Evidence from an estimated DSGE model (2019)
Working Paper: Shadow Banking and the Great Recession (2019)
Working Paper: Shadow Banking and the Great Recession: Evidence from an Estimated DSGE Model (2019)
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Persistent link: https://EconPapers.repec.org/RePEc:eee:dyncon:v:139:y:2022:i:c:s0165188922001105

DOI: 10.1016/j.jedc.2022.104404

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