Financial Cycles, Housing and the Macroeconomy

• Author: Raoul Minetti
• DOI: http://doi.org/10.1111/infi.12065
• Date: 01 June 2015
• Published date: 01 June 2015

REVIEW

Financial Cycles, Housing and

the Macroeconomy

Raoul Minetti

Department of Economics, Michigan State University, East Lansing,

Michigan, USA.

Nowotny, E., D. Ritzberger-Gr€

unwald and P. Back

e, eds. (2014), Financial Cycles and th e Real

Economy. London: Edward Elgar.

Wachter, S., M. Cho and M. Joong Tcha, eds. (2014), The Glo bal Financial Crisis an d Housing.

London: Edward Elgar.

I. Introduction

The global financial crisis that started in 2008 and the sovereign debt crisis of the

euro area have highlighted the impor tance of studying t he interaction betwe en the

financial cycle and t he business cycle. A nalysing the nature of t his interaction is

critical to understa nding causes, trans mission mechanis ms and consequences of

aggregate fluctuati ons generally. In a recent article, Schula rick and Taylor (2012)

investigated the be haviour of credit agg regates over more than a century (1 870–

2008). Two findings from their analysis stand out. First, whi le prior to 1945 credi t

aggregates exhibited a rou ghly stable relationship w ith money aggregates an d GDP

International Finance 18:2, 2015: pp. 249–262

DOI: 10.1111/infi.12065

© 2015 John Wiley & Sons Ltd