This article originally appeared on the Brookings Institution site on Thursday, September 13, 2018. To read the original version of this post, including charts, click here.
At the height of the financial crisis a decade ago, economists and policymakers underestimated the depth and severity of the recession that would follow. I argue in a paper released today by the Brookings Papers on Economic Activity (BPEA) that remedying this failure demands a more thorough inclusion of credit-market factors in models and forecasts of the economy. I also provide new evidence that suggests that the severity