2011/12/08 by Stijn Claessens, M. Ayhan Kose, M. Ayhan Köse +1 · 8 citations
Economics, Econometrics and Finance · #Global Financial Crisis and Policies #Monetary Policy and Economic Impact #Banking stability, regulation, efficiency
paper · doi:10.1016/j.jinteco.2011.11.008
This paper analyzes the interactions between business and financial cycles using an extensive database covering 44 countries for the period 1960:1-2010:4. Our analysis shows that there are strong linkages between the different phases of business and financial cycles. In particular, recessions associated with financial disruptions, notably house and equity price busts, tend to be longer and deeper than other recessions. Conversely, while recoveries following asset price busts tend to be weaker, recoveries associated with rapid growth in credit and house prices are often stronger. These findings emphasize the importance of financial market developments for the real economy.