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Journal Article
The credit-output link vs. the money-output link: new evidence
Journal Article
Banking and the economy: what are the facts?
Cara S. Lown explores the banking industry's role in the economy and finds evidence supporting the idea that fluctuations in bank credit are related to fluctuations in economic activity. She also finds that bank asset holdings adjust before changes in economic activity and that the banking system's security-to-asset ratio strongly predicts economic growth. By analyzing terms of bank lending over the business cycle, Lown concludes that variations in lending terms are consistent with the argument that restrictions on bank credit adversely affect the economy. Lown's study reflects the renewed ...
Journal Article
Listening to loan officers: the impact of commercial credit standards on lending and output
Over most of the last thirty-three years, the Federal Reserve has polled a small number of bank loan officers about their moves to tighten or ease commercial credit standards. Although the Senior Loan Officer Opinion Survey uses a small sample and gathers only qualitative information, it proves to be a useful tool in predicting changes in commercial lending and output. The authors find a strong correlation between tighter credit standards and slower loan growth and output, even after controlling for credit demand and other predictors of lending and output. The analysis also shows that the ...
Journal Article
Is there an inflation puzzle?
Why has U.S. inflation failed to accelerate despite six years of continuing economic expansion. The authors investigate whether compensation growth has played a role, either as a temporary restraint on inflation or as the underlying source of a new inflation regime. They offer two pieces of evidence suggesting that compensation growth has in fact acted as a temporary curb on rising prices. First, they show that the forecasting performance of a traditional Phillips curve model begins to break down in late 1993. When a measure of compensation growth is incorporated, however, the stability of ...