NATIONAL BUREAU OF ECONOMIC RESEARCH
NATIONAL BUREAU OF ECONOMIC RESEARCH

Misintermediation and Business Fluctuation

J. Huston McCulloch

NBER Working Paper No. 160
Issued in 1977

Individuals plan consumption and production for different points in the future, using interest rates of various maturities as a guide. How-ever, individuals do not always pre-contract all planned future borrowing and lending, and the intermediaries they work through often do not match the maturity structure of their assets and liabilities. As a result of this individual failure to hedge and institutional "misintermediation", aggregate production and consumption plans for each period in the future need not coincide. The resulting discrepancy will eventually appear as a recession or boom, involving an unanticipated change in interest rates. Fiscal stimulus aggravates the welfare loss associated with a recession, whether the spending is consumption-displacing or wholly wasteful.

download in pdf format
   (357 K)

email paper

This paper is available as PDF (357 K) or via email.

Acknowledgments

Machine-readable bibliographic record - MARC, RIS, BibTeX

Document Object Identifier (DOI): 10.3386/w0160

Published: McCulloch, J. Huston. "Misintermediation and Macroeconomic Fluctuations," Journal of Monetary Eocnomics, Vol. 8, No. 1, pp. 103-115, (July 1981).

 
Publications
Activities
Meetings
Data
People
About

Support
National Bureau of Economic Research, 1050 Massachusetts Ave., Cambridge, MA 02138; 617-868-3900; email: info@nber.org

Contact Us