Library Header Image
LSE Research Online LSE Library Services

The myth of financial innovation and the great moderation

Den Haan, Wouter J. and Sterk, Vincent (2010) The myth of financial innovation and the great moderation. The Economic Journal, 121 (553). pp. 707-739. ISSN 0013-0133

Full text not available from this repository.
Identification Number: 10.1111/j.1468-0297.2010.02400.x


Financial innovation is widely believed to be at least partly responsible for the recent financial crisis. At the same time, there are empirical and theoretical arguments that support the view that changes in financial markets, in particular, innovations in consumer credit and home mortgages, played a role in the ‘great moderation’. This article questions empirical evidence supporting this view. Especially the behaviour of aggregate home mortgages changed less during the great moderation than is typically believed. A remarkable change we do find is that monetary tightenings became episodes during which financial institutions other than banks increased their mortgages holdings.

Item Type: Article
Official URL:
Additional Information: © 2010 The Authors; The Royal Economic Society
Divisions: Economics
Subjects: H Social Sciences > HB Economic Theory
H Social Sciences > HG Finance
JEL classification: G - Financial Economics > G0 - General > G00 - General
Date Deposited: 14 Feb 2012 10:49
Last Modified: 16 May 2024 01:09

Actions (login required)

View Item View Item