Capital-Based Credit Cycle Analysis

8 Pages Posted: 10 Oct 2016  

Antony P. Mueller

Federal University of Sergipe (UFS) - Universidade Federal de Sergipe; University of Erlangen-Nuremberg-Friedrich Alexander Universität Erlangen Nürnberg

Date Written: October 7, 2016

Abstract

The present model - relates money to capital and economic growth - advances the ISLM-AS approach - captures macroeconomic policy concepts - combines the business with the credit cycle

Capital-based credit cycle analysis links business activity to economic growth and closes the gap between the short and the long run. This approach reinstates capital as a crucial variable of macroeconomics. Capital connects the neoclassical growth theory with money in a model derived from the equation exchange. Based on a strict distinction between the monetary and the real variables, the capital-based credit cycle model provides a tool for identifying the various stages of the business cycle in its relation to liquidity, savings and capital accumulation. As a device for teaching and research, the model offers a consistent analytical framework that will serve as a complement to the standard models of macroeconomics.

Keywords: Credit cycle, business cycle, capital-based macroeconomics, ISLM-AS, GSMS-SS, economic growth

JEL Classification: E32, E44, E52, 04

Suggested Citation

Mueller, Antony P., Capital-Based Credit Cycle Analysis (October 7, 2016). Available at SSRN: https://ssrn.com/abstract=2849425 or http://dx.doi.org/10.2139/ssrn.2849425

Antony P. Mueller (Contact Author)

Federal University of Sergipe (UFS) - Universidade Federal de Sergipe ( email )

Departamento de Economia
Jardim Rosa Elze, Av. Marechal Rondon
São Cristóvão, Sergipe 491000-000
Brazil
55-79-996013131 (Phone)

HOME PAGE: http://www.continentaleconomics.com

University of Erlangen-Nuremberg-Friedrich Alexander Universität Erlangen Nürnberg ( email )

Schloßplatz 4
Erlangen, Bavaria 91054
Germany

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