Financial frictions have been identified as key factors affecting economic fluctuations and growth. But, can institutional reforms reduce financial frictions? Based on a canonical investment model, we consider two potential channels: (i) financial transaction costs at the firm level; and (ii)...

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,...

This paper analyzes the interactions between business and financial cycles using an extensive database of over 200 business and 700 financial cycles in 44 countries for the period 1960:1-2007:4. Our results suggest that there are strong linkages between different phases of business and financial...