Bezemer, Dirk J (2009): Explaining the Great Moderation: Credit in the Macroeconomy Revisited.
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This study in recent history connects macroeconomic performance to financial policies in order to explain the decline in volatility of economic growth in the US since the mid-1980s, which is also known as the ‘Great Moderation’. Existing explanations attribute this to a combination of good policies, good environment, and good luck. This paper hypothesizes that before and during the Great Moderation, changes in the structure and regulation of US financial markets caused a redirection of credit flows, increasing the share of mortgage credit in total credit flows and facilitating the smoothing of volatility in GDP via equity withdrawal and a wealth effect on consumption. Institutional and econometric analysis is employed to assess these hypotheses. This yields substantial corroboration, lending support to a novel ‘policy’ explanation of the Moderation.
|Item Type:||MPRA Paper|
|Original Title:||Explaining the Great Moderation: Credit in the Macroeconomy Revisited|
|Keywords:||real estate, macro volatility|
|Subjects:||E - Macroeconomics and Monetary Economics > E4 - Money and Interest Rates > E44 - Financial Markets and the Macroeconomy
G - Financial Economics > G2 - Financial Institutions and Services > G21 - Banks; Depository Institutions; Micro Finance Institutions; Mortgages
|Depositing User:||Dirk J Bezemer|
|Date Deposited:||25. Jun 2009 00:02|
|Last Modified:||15. Feb 2013 08:07|
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