How do Credit Supply Shocks Affect the Real Economy? Evidence from the United States in the 1980s / Atif Mian, Amir Sufi, Emil Verner.

Format:

Book

Author/Creator:

Mian, Atif.

Contributor:

National Bureau of Economic Research.

Sufi, Amir.

Verner, Emil.

Series:

Working Paper Series (National Bureau of Economic Research) no. w23802.

NBER working paper series no. w23802

Language:

English

Physical Description:

1 online resource: illustrations (black and white);

Place of Publication:

Cambridge, Mass. National Bureau of Economic Research 2017.

Summary:

We study the business cycle consequences of credit supply expansion in the U.S. The 1980's credit boom resulted in stronger credit expansion in more deregulated states, and these states experience a more amplified business cycle. A new test shows that amplification is primarily driven by the local demand rather than the production capacity channel. States with greater exposure to credit expansion experience larger increases in household debt, the relative price of non-tradable goods, nominal wages, and non-tradable employment. Yet there is no change in tradable sector employment. Eventually states with greater exposure to credit expansion experience a significantly deeper recession.

Notes:

Print version record

September 2017.