Credit: a starring role in the downturn

Oscar Jorda

FRBSF Economic Letter, 2012, issue apr16

Abstract: Credit is a perennial understudy in models of the economy. But it became the protagonist in the Great Recession, reviving a role it had not played since the Great Depression. In fact, the central part played by credit in the downturn and weak recovery of recent years is not unusual. A study of 14 advanced economies over the past 140 years shows that financial crises have frequently led to severe and prolonged recessions. Shining the spotlight on credit turns out to be crucial in understanding recent economic events and the outlook.

Keywords: Credit; Recessions (search for similar items in EconPapers)
Date: 2012
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