I am an Assistant Professor of Economics at Millsaps College. My research fields are macroeconomics, monetary economics, finance, over-the-counter (OTC) markets, and applied econometrics.  In particular, I study the relationship between OTC markets for credit and various debt securities (e.g., bank loans and credit default swaps), monetary policy, and macroeconomic activity.

My paper entitled The Credit Card and Small Business Lending Channels of Monetary Policy studies the transmission of monetary policy explicitly through credit card and small business bank loans.  Using data from 1970 to 2007, I estimate a time-varying parameter vector autoregression and find that the response from each loan to a monetary tightening is time-dependent with respect to its direction and magnitude.  While traditional bank lending theory can successfully explain a loan contraction in response to tighter monetary policy, it often struggles to do the same for an expansion. 

To address this shortcoming, I develop a general equilibrium model of consumer and small business lending to analytically investigate the underlying mechanisms driving these channels.  The model emphasizes an alternative subchannel through which a monetary tightening can lead to a lending expansion via credit limits.   This subchannel, operating solely through unsecured credit, proposes a new theory to justify an expansionary lending response to tightened monetary policy that the traditional lending channel literature has yet to address.

My paper entitled The Effects of Sector-Specific Credit Supply Shocks on the U.S. Economy studies credit market activity from a broader macroeconomic perspective and has received two Best Paper awards.  Within a Bayesian structural vector autoregression framework, I investigate the implications of credit supply shocks arising in the household, corporate, and banking sectors for U.S. business cycle dynamics.  The model reveals that between 1952 and 2018, bank credit supply shocks explain up to 25% of GDP fluctuations, while household and corporate credit supply shocks explain up to 15%.  The paper’s results provide insight on the increasingly complex and critical relationship between credit markets and the macroeconomy.  Given the degree of financial connectedness among today’s domestic and global economies, this relationship will likely continue to capture the attention of not only academic researchers, but also monetary and fiscal policymakers. 


My research page with download links to my papers can be found here.


My current CV can be downloaded here.


Maximillian Littlejohn