The Dollar, Bank Leverage, and Real Economic Activity: An Evolving Relationship
AEA Papers and Proceedings
vol. 110,
May 2020
(pp. 529-34)
Abstract
The interest in how financial conditions affect real economic activity has grown since the great financial crisis (GFC), not least because some of the mechanisms at play in the financial sector may have changed. We shed light on this issue by examining the empirical relationship between global Purchasing Managers' Indices, world trade, and indicators of global financial conditions, with a special focus on the broad dollar index. We show that the influence of the dollar on real economic activity and global trade seems to have increased since the GFC, while that of the VIX has decreased.Citation
Erik, Burcu, Marco J. Lombardi, Dubravko Mihaljek, and Hyun Song Shin. 2020. "The Dollar, Bank Leverage, and Real Economic Activity: An Evolving Relationship." AEA Papers and Proceedings, 110: 529-34. DOI: 10.1257/pandp.20201097Additional Materials
JEL Classification
- E23 Macroeconomics: Production
- E44 Financial Markets and the Macroeconomy
- F31 Foreign Exchange
- F65 Economic Impacts of Globalization: Finance
- G01 Financial Crises
- E23 Macroeconomics: Production
- E44 Financial Markets and the Macroeconomy