An Eclectic Credit Cycle Search: The Case of US, Japan and Germany

Credit crunches, quantitative easing and especially international credit cycles are all monetary facets of the still ongoing global economic crisis and financial turmoil. This paper investigates global credit cycle fundamental characteristics, among three leading economies; that is, the USA, Japanese and German. Our statistically sophisticated time series data come from the Bank of International Settlements (BIS) open source. These valuable data cover the period of complete time series, from 1970(Q1) up to 2015(Q1), covering the whole data availability period for these three economic leaders. We indicate that during the 70’s and the first decade of the 21st century, we face significant statistical evidence that credit supply shocks in particular, in economies that lead capitalism globally, affect each other economy quite seriously. The credit data confirm more the presence of an international credit cycle, in the sense that credit growth rates, in these three leading economies in particular, move together over time. We also verify, through classic impulse response analysis, that US credit supply shocks have a stronger effect upon the Japanese and German credit supply variable, for both the 1973 and most significantly the 2008 financial crisis years.