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Implications of Financial Cycles for Europe’s Economic Growth and Its Sustainability
Client/Funding Institution
Anniversary Fund of the Oesterreichische Nationalbank
Abstract
In this research project we examined the potentially changing nature of global economic development by focusing on the implications of cyclical movements in financial markets for economic growth and its sustainability. Based on historical data characterising financial market segments of advanced and developing economies we identified financial cycles and explored three channels through which they affect economic growth: 1) cross-country macroeconomic spillovers arising from financial shocks and their synchronisation; 2) interaction between financial cycles and macroeconomic imbalances; 3) the dynamics of output gaps and potential output levels taking financial cycles into account. As an overarching theme, we explicitly tracked implications for economic growth in Europe, the relative merits of bank-based and market-based financial systems, and the role of global economic interconnectedness - issues of significant policy relevance both currently and in the years to come.
Duration
August 2016 - July 2018
wiiw team Leader
wiiw Staff
Publications
- Financial Cycles in Europe: Dynamics, Synchronicity and Implications for Business Cycles and Macroeconomic Imbalances
- Dynamic Interactions Between Financial and Macroeconomic Imbalances: A Panel VAR Analysis
- Estimation of Aggregate and Segment-specific Financial Cycles for a Global Sample of Countries
- Financial Cycles Around the World
- Financial Cycles in Credit, Housing and Capital Markets: Evidence from Systemic Economies
Open Data
Keywords: economic growth, financial cycle, macroeconomic spillovers, business cycle, macroeconomic imbalances, financial structure
Countries covered: Argentina, Australia, Austria, Belgium, Brazil, Bulgaria, Canada, Chile, China, Croatia, Czechia, Estonia, Finland, France, Germany, Great Britain, Hungary, Indonesia, Italy, Japan, Latvia, Lithuania, Malaysia, Mexico, Netherlands, Norway, Philippines, Poland, Romania, Russia, Singapore, Slovakia, Slovenia, South Korea, Spain, Sweden, Switzerland, Thailand, Turkey, USA
Research Areas: Macroeconomic Analysis and Policy, Other