Credit crises, money and contractions: An historical view

Michael D. Bordo, Joseph G. Haubrich

Research output: Contribution to journalArticle

50 Scopus citations


The relatively infrequent nature of major credit distress events makes an historical approach particularly useful. Using a combination of historical narrative and econometric techniques, we identify major periods of credit distress from 1875 to 2007, examine the extent to which credit distress arises as part of the transmission of monetary policy, and document the subsequent effect on output. Using turning points defined by the Harding-Pagan algorithm, we identify and compare the timing, duration, amplitude and co-movement of cycles in money, credit and output. Regressions show that financial distress events exacerbate business cycle downturns both in the 19th and 20th centuries and that a confluence of such events makes recessions even worse.

Original languageEnglish (US)
Pages (from-to)1-18
Number of pages18
JournalJournal of Monetary Economics
Issue number1
StatePublished - Jan 1 2010

All Science Journal Classification (ASJC) codes

  • Economics and Econometrics
  • Finance


  • Business cycles
  • Credit
  • Monetary policy

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