A new working paper sets out a sweeping analysis of the literature on macro-financial linkages, finding that many gaps in understanding still need to be filled, particularly on the supply side.

Macroeconomic implications of financial imperfections: a survey splits the problem into the demand side – how household balance sheets influence their ability to borrow – and the supply side – how banks may find their ability to lend curtailed by problems in their own balance sheets.

The paper