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Measuring Wealth and Financial Intermediation and Their Links to the Real Economy$
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Charles R. Hulten and Marshall B. Reinsdorf

Print publication date: 2015

Print ISBN-13: 9780226204260

Published to Chicago Scholarship Online: September 2015

DOI: 10.7208/chicago/9780226204437.001.0001

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PRINTED FROM CHICAGO SCHOLARSHIP ONLINE (www.chicago.universitypressscholarship.com). (c) Copyright University of Chicago Press, 2021. All Rights Reserved. An individual user may print out a PDF of a single chapter of a monograph in CHSO for personal use.date: 19 September 2021

Integrating the Economic Accounts

Integrating the Economic Accounts

Lessons from the Crisis

Chapter:
(p.19) 1 Integrating the Economic Accounts
Source:
Measuring Wealth and Financial Intermediation and Their Links to the Real Economy
Author(s):

Barry Bosworth

Publisher:
University of Chicago Press
DOI:10.7208/chicago/9780226204437.003.0001

The 2008-09 financial crisis was not primarily a consequence of a lack of information about financials market activities. Rather, it reflected an analytical failure to draw the appropriate conclusions about the linkages and implications of financial innovations. However, gaps in the statistical framework for monitoring the evolution of the financial system and its risk characteristics did contribute to the problems. This paper draws some conclusions from the crisis to discuss the major data gaps in the current statistical framework for overseeing the financial sector–principally the flow of funds. These gaps include measures to evaluate changing risk characteristics of financial claims, their maturity and liquidity, the emergence of the shadow banking system, and the lack of transparency with regard to the distribution of counterparty risks. The first part of the paper details the major financial sector innovations and their interactions that led up to the crisis. That is followed by an exploration of their real sector consequences.

Keywords:   financial innovations, subprime crisis, shadow banking system, liquidity, default risk, flow-of-funds

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