Live revision! Join us for our free exam revision livestreams Watch now

Topic updates

New evidence on financial cycles

Geoff Riley

28th August 2016

Financial cycles are long – on average twice the length of business cycles. At the same time, there is substantial heterogeneity of national cycles across G-7 countries, ranging from very similar financial and business cycles in Germany to markedly different cycles in the United States and Italy. These are among the findings of research by Yves Schüler, Paul Hiebert and Toumas Peltonen, presented at the annual congress of the European Economic Association in Geneva in August 2016.

Their study concludes that policies targeting financial cycles (such as countercyclical macroprudential policies) can act as a powerful complement to traditional stabilisation policies targeting the business cycle (such as macroeconomic policies, including monetary policy) – particularly in periods when there may be a considerable disconnect between financial markets and the real economy.

Geoff Riley

Geoff Riley FRSA has been teaching Economics for over thirty years. He has over twenty years experience as Head of Economics at leading schools. He writes extensively and is a contributor and presenter on CPD conferences in the UK and overseas.

© 2002-2024 Tutor2u Limited. Company Reg no: 04489574. VAT reg no 816865400.