What exactly led to the Great Recession's persistent declines in employment and output? Economists still debate that question, but one key insight is that severed access to credit played a big role. To understand why, we need to take a closer look at the precipitous rise and (partial) fall of zero-APR credit card offers. Perhaps policymakers should keep an eye on promotional lending, and maybe even reserve a permanent spot for credit cards in their macroprudential policy considerations.

This article appeared in the Second Quarter 2021 edition of Economic Insights. Download and read the full issue.