Friday, October 03, 2008

Bernanke and the Financial Accelerator Model

After the recent two weeks of tumult in the American economy, consumers couldn't be blamed for wishing they had a crystal ball that could help them see into the uncertain future. Will there be a recession? How bad would it be? Should Congress and the White House launch a $700 billion Wall Street rescue mission?

The closest alternative to a crystal ball, in the real world, is a computer model of the economy. Back in the 1980s, one such model was created by none other than Ben Bernanke, who's now at the center of the crisis as the chairman of the Federal Reserve.

That is from a story in NPR covering the financial accelerator model invented by none other than Ben Bernanke and NYU professor Mark Gertler. More here.

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