We study the synchronization of credit booms and busts among 12 major European economies and the United States between … 1972-2011. We propose a regression-based procedure to test whether boom-bust phases of credit cycles coincide across … countries and to cluster countries with positively synchronized credit cycles. We find strong evidence against the existence of …

The Basel credit-to-GDP gap is the single most popular measure of excessive credit growth and the financial cycle in … general. It is based, however, on a purely statistical understanding of excessiveness: Growth is excessive if the credit …-to-GDP ratio (i.e. the ratio of credit to nominal GDP) is significantly above its long-term trend. This paper presents an …