Department of Economics

Financial-Sector Shocks in a Credit-View Model

Financial-Sector Shocks in a Credit-View Model

Burton A. Abrams

Abstract

A variation of the Bernanke-Blinder credit-view model reveals that holding constant the money supply following various financial-sector shocks, including an autonomous drop in the money multiplier, is insufficient to prevent aggregate demand from decreasing.

JEL Codes: F41, E51

Keywords:  credit-view model, monetary policy, money-supply model

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