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A Tale Of Two Cycles In Developing And Advanced Economies: A Country Case Study Comparison


  • Percic Stanislav

    () (Alexandru Ioan Cuza University of Iasi, 0)

  • Apostoaie Constantin-Marius

    () (Alexandru Ioan Cuza University of Iasi,)

  • Chirlesan Dan



This research aims at performing an econometric analysis on the credit cycle and business cycle from a comparative perspective, with a focus on ten developing and advanced economies from the area of Central, Eastern and South-Eastern Europe, in order to better understand their behaviour and the impact of the interactions between them. To achieve this aim, the study focuses on two strategic objectives: a) on the one hand, it analyzes the short-term dynamics (from one quarter to the other) of the relationships between credit expansion and economic growth in order to better grasp which variable influences the other; and b) on the other hand, the research investigates the cyclical components of the data sets (after extracting them from the real GDP and the total volume of credits given by the banking system to the non-governmental sector), i.e. it performs statistical analysis on the medium-term relationships between the business cycle and the credit cycle for each of the ten European economies. The findings revealed in the first phase of the investigation that we cannot speak of a relation of unidirectional causality between credit expansion and economic growth across countries (not even across geographical regions). In Bulgaria, Latvia, Lithuania and Slovenia, economic growth had an important influence over the crediting activity, thus “guiding†it, whereas in the case of Poland, Romania and Slovakia, Granger-type causality relations were registered from the crediting expansion process towards economic growth. The second part of the investigation revealed that sometimes the credit cycle seems to be independent from the business cycle, manifesting an amplitude, a synchronicity and a volatility that is different from and superior to that of business cycle in all the analyzed countries (“having a mind of its own†). Moreover, there is evidence of important spill-over effects of the credit activity across banking systems at national and regional level thus confirming the international feature of the credit cycle.

Suggested Citation

  • Percic Stanislav & Apostoaie Constantin-Marius & Chirlesan Dan, 2013. "A Tale Of Two Cycles In Developing And Advanced Economies: A Country Case Study Comparison," Annals of Faculty of Economics, University of Oradea, Faculty of Economics, vol. 1(2), pages 440-450, December.
  • Handle: RePEc:ora:journl:v:1:y:2013:i:2:p:440-450

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    References listed on IDEAS

    1. Chen, Nan-Kuang, 2001. "Bank net worth, asset prices and economic activity," Journal of Monetary Economics, Elsevier, vol. 48(2), pages 415-436, October.
    2. Kiyotaki, Nobuhiro & Moore, John, 1997. "Credit Cycles," Journal of Political Economy, University of Chicago Press, vol. 105(2), pages 211-248, April.
    3. Ross Levine & Norman Loayza & Thorsten Beck, 2002. "Financial Intermediation and Growth: Causality and Causes," Central Banking, Analysis, and Economic Policies Book Series,in: Leonardo Hernández & Klaus Schmidt-Hebbel & Norman Loayza (Series Editor) & Klaus Schmidt-Hebbel (Se (ed.), Banking, Financial Integration, and International Crises, edition 1, volume 3, chapter 2, pages 031-084 Central Bank of Chile.
    4. Michael B. Devereux & James Yetman, 2010. "Leverage Constraints and the International Transmission of Shocks," Journal of Money, Credit and Banking, Blackwell Publishing, vol. 42(s1), pages 71-105, September.
    5. Ben S. Bernanke & Mark Gertler, 1995. "Inside the Black Box: The Credit Channel of Monetary Policy Transmission," Journal of Economic Perspectives, American Economic Association, vol. 9(4), pages 27-48, Fall.
    6. Gertler, Mark & Kiyotaki, Nobuhiro, 2010. "Financial Intermediation and Credit Policy in Business Cycle Analysis," Handbook of Monetary Economics,in: Benjamin M. Friedman & Michael Woodford (ed.), Handbook of Monetary Economics, edition 1, volume 3, chapter 11, pages 547-599 Elsevier.
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    More about this item


    credit cycle; business cycle; unidirectional causality; amplitude; synchronicity;

    JEL classification:

    • C01 - Mathematical and Quantitative Methods - - General - - - Econometrics
    • C19 - Mathematical and Quantitative Methods - - Econometric and Statistical Methods and Methodology: General - - - Other
    • C29 - Mathematical and Quantitative Methods - - Single Equation Models; Single Variables - - - Other
    • E30 - Macroeconomics and Monetary Economics - - Prices, Business Fluctuations, and Cycles - - - General (includes Measurement and Data)
    • E32 - Macroeconomics and Monetary Economics - - Prices, Business Fluctuations, and Cycles - - - Business Fluctuations; Cycles
    • E51 - Macroeconomics and Monetary Economics - - Monetary Policy, Central Banking, and the Supply of Money and Credit - - - Money Supply; Credit; Money Multipliers


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