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Working Paper
The Money View Versus the Credit View
We argue that Schularick and Taylor?s (2012) comparison of credit growth and monetary growth as financial-crisis predictors does not necessarily provide a valid basis for achieving one of their stated intentions: evaluating the relative merits of the ?money view? and ?credit view? as accounts of macroeconomic outcomes. Our own analysis of the postwar evidence suggests that money outperforms credit in predicting economic downturns in the 14 countries in Schularick and Taylor?s dataset. This contrasts with Schularick and Taylor?s (2012) highly negative verdict on the money view. In accounting ...