Gyrations in Financial Markets

29 Pages Posted: 16 Jul 2011

See all articles by Stijn Claessens

Stijn Claessens

Bank for International Settlements (BIS)

M. Ayhan Kose

Development Prospects Group at the World Bank

Marco E. Terrones

International Monetary Fund (IMF)

Date Written: March 2011

Abstract

We document the main features of financial cycles using a comprehensive database of credit, housing and equity prices. We report four major results. First, financial cycles can be protracted and costly episodes. Second, they can feed off each other and worsen, becoming financial crises. Third, they tend to have a significant global component, as they are highly synchronized across countries. Finally, when they take place in tandem in many countries, they often lead to more costly outcomes. These findings, combined with the results of recent research, have important implications for the design of macroeconomic and financial sector policies.

Suggested Citation

Claessens, Stijn and Kose, M. Ayhan and Terrones, Marco E., Gyrations in Financial Markets (March 2011). Available at SSRN: https://ssrn.com/abstract=1886482 or http://dx.doi.org/10.2139/ssrn.1886482

Stijn Claessens

Bank for International Settlements (BIS) ( email )

Centralbahnplatz 2
CH-4002 Basel
Switzerland

M. Ayhan Kose (Contact Author)

Development Prospects Group at the World Bank ( email )

1818 H Street, NW
Washington, DC 20433
United States

Marco E. Terrones

International Monetary Fund (IMF) ( email )

700 19th Street NW
Washington, DC 20431
United States
202-623-4329 (Phone)

HOME PAGE: http://imf.org/external/np/CV/AuthorCV.aspx?AuthID=171

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