Schularick, Moritz and Alan Taylor. 2012. “Credit Booms Gone Bust: Monetary Policy, Leverage Cycles and Financial Crises,” American Economic Review 102.2: 1029–1061.One suggestion is that post-1945 macroeconomic stabilisation has prevented the “strong Fisherian debt deflation mechanism” that was seen in pre-1945 business cycles (Schularick and Taylor 2012: 1032).
Broadly, this seems to support Minsky’s and Kindleberger’s view of financial crises as induced by credit booms where intense speculation on asset prices has occurred (Schularick and Taylor 2012: 1032).
The lesson is that the direction of credit and financial regulation are very important.
BIBLIOGRAPHY
Schularick, Moritz and Alan Taylor. 2012. “Credit Booms Gone Bust: Monetary Policy, Leverage Cycles and Financial Crises,” American Economic Review 102.2: 1029–1061.
