American Economic Review
ISSN 0002-8282 (Print) | ISSN 1944-7981 (Online)
Nobel Lecture: Banking, Credit, and Economic Fluctuations
American Economic Review
vol. 113,
no. 5, May 2023
(pp. 1143–69)
Abstract
Credit markets, including the market for bank loans, are characterized by imperfect and asymmetric information. These informational frictions can interact with other economic forces to produce periods of credit-market stress, in which intermediation is unusually costly and households and businesses have difficulty obtaining credit. A high level of credit-market stress, as in a severe financial crisis, may in turn produce a deep and prolonged recession. I present evidence that financial distress and disrupted credit markets were important sources of the Great Depression of the 1930s and the Great Recession of 2007–2009. Changes in the state of credit markets also play a role in "garden-variety" business cycles and in the transmission of monetary policy to the economy.Citation
Bernanke, Ben S. 2023. "Nobel Lecture: Banking, Credit, and Economic Fluctuations." American Economic Review 113 (5): 1143–69. DOI: 10.1257/aer.113.5.1143JEL Classification
- D82 Asymmetric and Private Information; Mechanism Design
- E32 Business Fluctuations; Cycles
- E44 Financial Markets and the Macroeconomy
- E52 Monetary Policy
- G21 Banks; Depository Institutions; Micro Finance Institutions; Mortgages
- N22 Economic History: Financial Markets and Institutions: U.S.; Canada: 1913-