Bank Lending and Monetary Policy: A Comment

With commendable timing, academic economists rediscovered bank lending just before the start of the 1990-91 recession. Bernanke (1983) claimed that the shifts in loan supply made a major contribution to the Great Depression of the early 1930s. Bernanke and Blinder (1988) developed a small model interrelating loans, deposits, and output. I refer to this work and the many papers that followed as "the lending view."