01968cas a2200241 a 4500 AALejournalIMF005176 230101c9999 xx r poo 0 0eng d 5.00 USD 9781451870190 1018-5941 BD-DhAAL BD-DhAAL Swiston, Andrew. A U.S. Financial Conditions Index : Putting Credit Where Credit is Due / Andrew Swiston. Washington, D.C. : International Monetary Fund, 2008. 1 online resource (35 pages) IMF Working Papers <strong>Off-Campus Access:</strong> No User ID or Password Required <strong>On-Campus Access:</strong> No User ID or Password Required Electronic access restricted to authorized BRAC University faculty, staff and students This paper uses vector autoregressions and impulse-response functions to construct a U.S. financial conditions index (FCI). Credit availability-proxied by survey results on lending standards-is an important driver of the business cycle, accounting for over 20 percent of the typical contribution of financial factors to growth. A net tightening in lending standards of 20 percentage points reduces economic activity by 3/4 percent after one year and 1u percent after two years. Much of the impact of monetary policy on the economy also works through its effects on credit supply, which is evidence supporting the existence of a credit channel of monetary policy. Shocks to corporate bond yields, equity prices, and real exchange rates also contribute to fluctuations in the FCI. This FCI is an accurate predictor of real GDP growth, anticipating turning points in activity with a lead time of six to nine months. 15B. Mode of access: Internet IMF Working Papers; Working Paper ; No. 2008/161 Full text available on IMF http://elibrary.imf.org/view/journals/001/2008/161/001.2008.issue-161-en.xml IMF e-Library