@article{172911,
  author = {Markus K. Brunnermeier},
  title = {Feedbacks: Financial Markets and Economic Activity},
  abstract = { Is credit expansion a sign of desirable financial deepening or the prelude to an inevitable bust? We study this question in modern US data using a structural VAR model of 10 monthly-frequency variables, identified by heteroskedasticity. Negative reduced-form responses of output to credit growth are caused by endogenous monetary policy response to credit expansion shocks. On average, credit and output growth remain positively associated. {\textquotedblleft}Financial stress{\textquotedblright} shocks to credit spreads cause declines in output and credit levels. Neither credit aggregates nor spreads provide much advance warning of the 2008-9 crisis, but spreads improve within-crisis forecasts. },
  year = {2021},
  journal = {American Economic Review},
  volume = {111},
  pages = {1845-1879},
  url = {https://www.aeaweb.org/articles?id=10.1257/aer.20180733},
  language = {eng},
}