BoE paper links inequality to credit crises
Central banks will redistribute resources whether they act or not, authors say
Rapid credit growth before a financial crisis generates a larger rise in inequality when the economy enters a downturn, research published by the Bank of England finds.
In the working paper, Jonathan Bridges, Georgina Green and Mark Joy analyse data from 26 advanced economies spanning five decades and around 100 recessions. They find that rapid credit growth in the three years before a downturn amplifies the subsequent rise in inequality.
The distributional effects are “statistically
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