Author: Daniel Lewis
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Firms and the banks that lend to them have unique relationships. Policy-makers who rely on models that ignore these specific links can underestimate the headwinds faced by certain businesses or fail to spot how financial risks are becoming concentrated in specific parts of the market.
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Policy-makers need to know that the research evidence on which their decisions are based is reliable. A powerful new testing method can assess the strengths and weaknesses of instruments used to analyse complex webs of cause-and-effect relationships – and thereby deliver better-informed advice.
