Money, Credit, and Financial Crises by International Monetary Regime: An Extension of Schularick & Taylor (2019)
Schularick and Taylor (ST) (2012) address a debate in the literature over whether broad money aggregates versus credit aggregates explain financial crises. Analyzing econometrically an impressive data set of financial crises and monetary and credit indicators spanning 14 countries between 1870 and 2008, their results provide support for lagged credit growth as the better predictor of financial crises relative to broad money. This paper provides two modest extensions: First, while the original analysis split the data across two major eras, pre- and post-WWII, ST’s data set encompasses the four major international monetary regimes in modern history—the gold standard (1870-1913), the interwar period (1920-1938), the Bretton Woods system (1948-1971), and post-Bretton Woods (or neoliberal) era (1972-2008)—for which I break down the time series to test if their results hold across each regime using their same methodology. Second, while ST use bank loans as their private sector credit indicator, credit aggregates in the neoliberal period encompass a greater proportion of tradable securities assets for which we have new data compiled by the IMF’s Global Debt Database (GDD). The GDD also provides disaggregated private sector time series for businesses and households. I test whether these indicators improve the predictive capacity of the original authors’ baseline model. In the first case, I find their results hold, credit aggregates still perform better. In the second, the updated credit aggregates which include debt securities as well as loans improve the baseline model prediction. I also find that household debt-to-GDP growth increases the likelihood of a crisis relative to the business sector.
Isolating The Consumption Effect Of Immigration On Firm Expansion At The Extensive Margin (2017)
Joint With Gihoon Hong
Joint With Gihoon Hong
This paper investigates how local firms respond to immigrant consumption at the extensive margin. We use an innovative approach to isolate the consumption channel by using on non-labor force participating immigrants inflows from the American Community Surveys from 2002 to 2011. As would be expected, we find that non-labor force participating immigrant inflows are highly correlated with establishment entry level and negatively associated with exits.
|File Size:||279 kb|
© 2018 AARON MEDLIN. All rights reserved.