The real engine of the business cycle

Wednesday, May 09, 2018

A valuable lesson from the Great Recession is that credit-supply expansions play a key role in subsequent recessions. When lenders make credit more available or more affordable, households respond by taking on debt, which drives up aggregate demand that is, until the music stops. AMIR SUFI and ATIF MIAN* analyse

CHICAGO: Every major financial crisis leaves a unique footprint. Just as banking crises throughout the 19th and 20th centuries revealed the importance of financial-sector liquidity and lenders of last resort, the Great Depression underscored the necessity of counter-cyclical fiscal and monetary policies.

And, more recently, the 2008 financial crisis and subsequent Great Recession revealed the key drivers of credit-driven business cycles.

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Violence doesn't solve anything!

Our weekly edition carries painful articles of people being murdered. Whilst some are classified as Gender Based Violence (GBV), there are still a large percentage of murder cases, which often happen at drinking spots, after people are heavily intoxicated. We have in the past carried articles where an individual was murdered because they refused to give someone a cigarette, and sadly this is where we are at now!In this very edition, there is an...

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