Credit Booms Gone Bust: Monetary Policy, Leverage Cycles and Financial Crises, 1870-2008

This paper is forthcoming in the American Economic Review. Some research was undertaken while Taylor was a visitor at the London School of Economics and a Houblon-Norman/George Fellow at the Bank of England. The generous support of both institutions is gratefully acknowledged. We thank Roland Beck, Warren Coats, Steven Davis, Charles Goodhart, Pierre-Cyrille Hautcoeur, Carl-Ludwig Holtfrerich, Gerhard Illing, Christopher Meissner, Kris Mitchener, Eric Monnet, Andreas Pick, Hyun Shin, Solomos Solomou, Richard Sylla, and two anonymous referees for helpful comments. We also benefitted from helpful comments by conference and workshop participants at the Bank of England, the Federal Reserve Bank of San Francisco, the 2010 EHA meetings, the ECB, the NBER DAE Program Meeting, the 16th Dubrovnik Economic Conference, New York University, Fordham University, Columbia University, the Free University of Berlin, and the Universities of Munich, Mannheim, Muenster and Kiel. Farina Casselmann, Stephanie Feser, and Felix Mihram provided valuable research assistance. All remaining errors are our own. The views expressed herein are those of the author(s) and do not necessarily reflect the views of the National Bureau of Economic Research.

• November 10, 2009
• February 12, 2010
• February 12, 2010