Collateral Damage: Effects of the Japanese Bank Crisis on Real Activity in the United States

Joe Peek; Eric S. Rosengren

doi:10.1257/aer.90.1.30

American Economic Review Vol. 90 No. 1 2000

Collateral Damage: Effects of the Japanese Bank Crisis on Real Activity in the United States

¹ Department of Economics, Boston College, Chestnut Hill, MA 02467, and Research Department T-8, Federal Reserve Bank of Boston. · ² Research Department T-8, Federal Reserve Bank of Boston, 600 Atlantic Avenue, Boston, MA 02106.

Abstract

The Japanese banking crisis provides a natural experiment to test whether a loan supply shock can affect real economic activity. Because the shock was external to U.S. credit markets, yet connected through the Japanese bank penetration of U.S. markets, this event allows us to identify an exogenous loan supply shock and ultimately link that shock to construction activity in U.S. commercial real estate markets. We exploit the variation across geographically distinct commercial real estate markets to establish conclusively that loan supply shocks emanating from Japan had real effects on economic activity in the United States.

DOI: 10.1257/aer.90.1.30
Volume: 90
Issue: 1
Pages: 30-45
Language: en
Sources: bibtex:phds-export.bib openalex crossref

Collateral Damage: Effects of the Japanese Bank Crisis on Real Activity in the United States

Abstract

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