Implications of Financial Cycles for Europe’s Economic Growth and Its Sustainability

Client/Funding Institution

Anniversary Fund of the Oesterreichische Nationalbank


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.


August 2016 - July 2018

wiiw team Leader

Amat Adarov

wiiw Staff

Nadya Heger, Galina Vasaros


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