New research reveals credit shocks have major impact on economy
The article discusses how traditional models of how money and credit affect the economy may not be balanced. By adjusting a common economic model, the researchers found that changes in credit supply and demand can impact the economy separately from changes in money supply and demand. This means that both money and credit play important roles in influencing the economy. The study suggests that the importance of money versus credit in economic policy depends on the types of shocks affecting each.