Credit Surfaces, Economic Activity, and Monetary Policy

21 Pages Posted: 2 Aug 2019

See all articles by John Geanakoplos

John Geanakoplos

Yale University; Santa Fe Institute

David E Rappoport W

Board of Governors of the Federal Reserve System

Date Written: July 29, 2019


A synthesis of new and old approaches in understanding macroeconomic fluctuations and the role of monetary policy (MP) is the credit surface, where the interest rate is a function of multiple credit terms: leverage, credit rating, term, etc. We gauge credit conditions using the credit surface in mortgage, corporate bond, and peer-to-peer lending markets, and explore its relationship with economic activity in these segments of the economy. In addition, we study the transmission of MP through the corporate bond credit surface. Our results suggest that the passthrough of MP is heterogeneous and non-monotonic in ex-ante riskiness, initially declining as risk increases but then increasing. Our preliminary results support the view that the credit surface is important for macroeconomic fluctuations and the transmission of MP.

Keywords: credit surface, monetary policy, monetary policy shocks, interest rates, mortgages

JEL Classification: E45, E52, G12

Suggested Citation

Geanakoplos, John D and Rappoport Wurgaft, David Elias, Credit Surfaces, Economic Activity, and Monetary Policy (July 29, 2019). Available at SSRN: or

John D Geanakoplos

Yale University ( email )

30 Hillhouse Avenue
New Haven, CT 06511
United States
203-432-3397 (Phone)

HOME PAGE: http://

Santa Fe Institute ( email )

1399 Hyde Park Road
Santa Fe, NM 87501
United States

David Elias Rappoport Wurgaft (Contact Author)

Board of Governors of the Federal Reserve System ( email )

20th Street and Constitution Avenue NW
Washington, DC 20551
United States

Do you have a job opening that you would like to promote on SSRN?

Paper statistics

Abstract Views
PlumX Metrics