DP9082 The Great Leveraging

Author(s): Alan M. Taylor
Publication Date: August 2012
Date Revised: October 2012
Keyword(s): banking, booms, credit, crises, financial development, fiscal policy, global imbalances, Great Recession, recessions
JEL(s): E3, E5, E6, N1, N2
Programme Areas: International Macroeconomics, Economic History
Link to this Page: cepr.org/active/publications/discussion_papers/dp.php?dpno=9082

What can history can tell us about the relationship between the banking system, financial crises, the global economy, and economic performance? Evidence shows that in the advanced economies we live in a world that is more financialized than ever before as measured by importance of credit in the economy. I term this long-run evolution ?The Great Leveraging? and present a ten--point examination of its main contours and implications.