One Ring to Rule Them All? New Evidence on World Cycles

September 20, 2019

Preview Citation

Format: Chicago

Eric Monnet, and Damien Puy. One Ring to Rule Them All? New Evidence on World Cycles, (USA: International Monetary Fund, 2019) accessed December 21, 2024

Disclaimer: IMF Working Papers describe research in progress by the author(s) and are published to elicit comments and to encourage debate. The views expressed in IMF Working Papers are those of the author(s) and do not necessarily represent the views of the IMF, its Executive Board, or IMF management.

Summary

We estimate world cycles using a new quarterly dataset of output, credit and asset prices assembled using IMF archives and covering a large set of advanced and emerging economies since 1950. World cycles, both real and financial, exist and are generally driven by US shocks. But their impact is modest for most countries. The global financial cycle is also much weaker when looking at credit rather than asset prices. We also challenge the view that syncronization has increased over time. Although this is true for prices (goods and assets), this not true for quantities (output and credit). The world business and credit cycles were as strong during Bretton Woods (1950–1972) as during the Globalization period (1984-2006). For most countries, the way their output co-moves with the rest of the world has changed little over the last 70 years. We discuss the reasons behind these new findings and their policy implications for small open economies.

Subject: Asset prices, Bond yields, Credit, Financial crises, Financial institutions, Financial integration, Financial markets, Global financial crisis of 2008-2009, Money, Prices

Keywords: Asset prices, Bind yield EM sample, Bond yields, Business Cycles, Credit, Credit data, Credit series, Credit statistics, Credit synchronization, EM sample, Equity price, Financial Cycles, Financial integration, GFC period, Global, Global financial crisis of 2008-2009, Globalization, Synchronization measure, Trade integration, US Monetary Policy, World credit cycle, World Cycles, World output, WP, Yield, Y-o-y credit growth

Publication Details

Pages:

36
Volume:

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DOI:

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Issue:

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Series:

Working Paper No. 2019/202
Stock No:

WPIEA2019202
ISBN:

9781513512969
ISSN:

1018-5941

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