We present a model of credit cycles arising from diagnostic expectations – a belief formation mechanism based on … nest rational expectations as a special case. In our model of credit cycles, credit spreads are excessively volatile, over …-react to news, and are subject to predictable reversals. These dynamics can account for several features of credit cycles and …

We present a model of credit cycles arising from diagnostic expectations - a belief formation mechanism based on … nest rational expectations as a special case. In our model of credit cycles, credit spreads are excessively volatile, over …-react to news, and are subject to predictable reversals. These dynamics can account for several features of credit cycles and …

. The combination of rapid credit and asset price growth over the prior three years, whether in the nonfinancial business or … years. This compares with a roughly 7% probability in normal times, when neither credit nor asset price growth has been … Kindleberger-Minsky view that crises are the byproduct of predictable, boom-bust credit cycles. The predictability we document …

We investigate cross-country determinants of private credit, using new data on legal creditor rights and private and … public credit registries in 129 countries. We find that both creditor protection through the legal system and information … sharing institutions are associated with higher ratios of private credit to GDP, but that the former is relatively more …