We study a business cycle with a Translog production function. We empirically identify a complementarity between labor and energy that leads to "procyclical" returns to scale, which is not compatible with the tightly parameterized production functions commonly used in the literature...

Theories such as Minsky's financial instability hypothesis or New Keynesian financial accelerator models assign a key role to financial factors in business cycle dynamics. We present descriptive statistics and a simple estimation framework to examine the financial-real interaction mechanisms...

This article investigates the business cycle behaviour of measures of perceived uncertainty and financial risk premia in Germany over the past two decades. Both the perceived uncertainty and the financial risk premia are highly countercyclical and may therefore amplify and propagate the...

Bank profitability leads the credit cycle. An increase in return on equity of the banking sector predicts rising credit-to-GDP ratios in a panel of 17 advanced economies spanning the years 1870 to 2015. However, increases in profitability also predict elevated crisis likelihood a few years...

Our study aims to bridge the gap between contemporary studies on financial cycles and the financial instability hypothesis in the form of a Minsky cycle (Minsky, 1963). Paper contribution range from explored causality links (financial cycles cause business cycles) to the empirical estimation of...

We build a model of endogenous credit cycles arising from the dynamics of adverse selection. Heterogeneous entrepreneurs trade productive assets in an anonymous market subject to financial frictions. Cream-skimming rent-seekers create lemon assets that can be traded. Lemon assets are...

Traditionally, economic growth and business cycles have been treated independently. However, the dependence of GDP levels on its history of shocks, what economists refer to as 'hysteresis,' argues for unifying the analysis of growth and cycles. In this paper, we review the recent empirical and...