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The Failure To Predict The Great Recession—A View Through The Role Of Credit

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  • Maria Dolores Gadea Rivas
  • Gabriel Perez-Quiros

Abstract

Much has been written about why economists failed to predict the latest crisis. Reading the literature, it seems that this crisis was so obvious that economists must have been blind not to see it coming. We approach this failure by looking at one of the key variables in this analysis, the evolution of credit. We compare the conclusions reached in the recent literature with those that could have been drawn from an ex-ante analysis. We show that the effect of credit on the business cycle cannot be exploited from a policymaker's point of view.

Suggested Citation

  • Maria Dolores Gadea Rivas & Gabriel Perez-Quiros, 2015. "The Failure To Predict The Great Recession—A View Through The Role Of Credit," Journal of the European Economic Association, European Economic Association, vol. 13(3), pages 534-559, June.
    • Handle: RePEc:bla:jeurec:v:13:y:2015:i:3:p:534-559
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    References listed on IDEAS

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