Discussion Paper

The Macro Effects of the Recent Swing in Financial Conditions

Abstract: Credit conditions tightened considerably in the second half of 2015 and U.S. growth slowed. We estimate the extent to which tighter credit conditions last year were responsible for the slowdown using the FRBNY DSGE model. We find that growth would have slowed substantially more had the Federal Reserve not delayed liftoff in the federal funds rate.

Keywords: DSGE; Monetary Policy; Spreads; Financial Conditions;

JEL Classification: E2; E5; G1;

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Bibliographic Information

Provider: Federal Reserve Bank of New York

Part of Series: Liberty Street Economics

Publication Date: 2016-05-25

Number: 20160525