DP10511 Credit, Financial Stability, and the Macroeconomy

Author(s): Alan M. Taylor
Publication Date: March 2015
Keyword(s): banks, financial crisis, financial history, leverage, macroeconomic history, macroprudential policy, monetary policy, recessions
JEL(s): E02, E31, E32, E42, E44, E51, E58, F32, F42, G01, G20, G28, N10, N20
Programme Areas: International Macroeconomics, Economic History
Link to this Page: cepr.org/active/publications/discussion_papers/dp.php?dpno=10511

Since the 2008 global financial crisis, and after decades of relative neglect, the importance of the financial system and its episodic crises as drivers of macroeconomic outcomes has attracted fresh scrutiny from academics, policy makers, and practitioners. Theoretical advances are following a lead set by a fast-growing empirical literature. Recent long-run historical work has uncovered a range of important stylized facts concerning financial instability and the role of credit in advanced economies, and this article provides an overview of the key findings.