Finance and Business Cycles: The Credit-Driven Household Demand Channel

By Atif R. Mian, Amir Sufi. Journal of Economic Perspectives, 2018

230 citations recorded by the source corpus.

What is the role of the financial sector in explaining business cycles? This question is as old as the field of macroeconomics, and an extensive body of research conducted since the Global Financial Crisis of 2008 has offered new answers. The specific idea put forward in this article is that expansions in credit supply, operating primarily through household demand, have been an important driver of business cycles. We call this the credit-driven household demand channel. While this channel helps explain the recent global recession, it also describes economic cycles in many countries over the past 40 years.

Subfields: Economics and Econometrics, Finance

View Paper: https://www.semanticscholar.org/paper/bde9248553a010f4a12c2f3e64ff88f7074a071c

Citations in the corpus

• How Does Credit Supply Expansion Affect the Real Economy? The Productive Capacity and Household Demand Channels (2020, unknown): “There is a large body of evidence supporting the view that credit supply expansion to households in 31 Electronic copy available at: https://ssrn.com/abstract=2971086 the United States fueled household demand (see, e.g., Mian and Sufi (2018) and citations therein).”