Will people read across to the present day? Nah… this time it’s different.
They take advantage of differences in the timing of bank deregulation across US states in the 1980s — specifically, limits on both inter-state and intra-state branches — to measure the importance of “credit supply shocks” for employment, consumer spending, house prices, indebtedness, and inflation. States more willing to let banks from other states enter their market, such as New York, had bigger booms in the 1980s and bigger busts subsequently when compared to places less open to financial-sector competition, such as Illinois.
These booms took the form of greater household borrowing, significantly faster inflation, and a big uptick in the size of the notoriously unproductive construction sector. Rather than encouraging worthwhile investments, easier lending standards only exacerbated the amplitude of the cycle: