Credit booms make for more severe recessions – BoE paper
Authors find credit growth is more reliable predictor of recession severity than debt
Rapid credit growth appears to be strongly linked to the severity of ensuing recessions – more so than debt – according to a Bank of England (BoE) staff working paper published on April 21.
Authors Jonathan Bridges, Chris Jackson and Daisy McGregor say their motivation is partly practical, as they hope to suggest which indicators are more useful for policymakers looking to head off the next financial crisis.
Their results, presented in Down in the slumps: the role of credit in five decades of
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