During the later part of our course, we learned about the link between the financial and real economy. In your own words, explain how events in financial markets can contribute (either exacerbate or cause) recessions. You should explain both the chain of causality and give a recent example of a development in financial markets which caused or contributed to a recession. During the later part of our course, we learned about the link between the financial and real economy. In your own words, explain how events in financial markets can contribute (either exacerbate or cause) recessions. You should explain both the chain of causality and give a recent example of a development in financial markets which caused or contributed to a recession.