Macro‐Finance Linkages

14 Pages Posted: 10 Aug 2016

Multiple version iconThere are 2 versions of this paper

Date Written: September 2016


In this survey, I review the academic and policy‐oriented literature on the linkages between financial markets and the rest of the economy. First, I summarize the leading economic theories for why the financial sector can influence the macroeconomy. Second, I consider empirical research on spillovers from the financial sector to the rest of the economy, as well as across financial markets in different countries. Third, I discuss key monetary policy debates regarding the appropriate response of central banks to financial conditions. Finally, I conclude with an overview of the major gaps in the existing literature.

Keywords: Contagion, Financial accelerator, Global Financial Crisis, Monetary policy

Suggested Citation

Morley, James, Macro‐Finance Linkages (September 2016). Journal of Economic Surveys, Vol. 30, Issue 4, pp. 698-711, 2016. Available at SSRN: or

James Morley (Contact Author)

University of Sydney ( email )

Rm 370 Merewether (H04)
Sydney, NSW 2006 2008

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