The Impact Of Credit Cycle On Business Cycle

Since the international financial crisis in 2008,the global macro economy has still been plagued by the downturn of economy.Governments in various countries have actively adopted relatively loose monetary policies to resist it,mainly increasing the amount of money by expanding bank credit.In the short term,the global economy has indeed shown signs of recovery.However,from overall view,these loose policies did not bring about a real recovery of the real economy in the nine years after the crisis.In the face of the dual impacts of the business cycle and the credit cycle,along with the increase of global capital flows and the expansion of capacity transfer size,only the internality dynamic linkages of the credit cycle and business cycle has been explored,can it really make credit-based monetary policies work in the business cycle.Therefore,in recent years,the issue of the dynamic relationship between the credit cycle and the business cycle has returned to the academic research in the economic and financial fields.Therefore,in order to reflect the interrelationship between the credit cycle and the business cycle systematically and comprehensively,this paper draws on related literature practices and attempts to subdivide the credit cycle into three pheses:the boom period,the decline period,and the stationary period.Then,using systematic GMM regression analysis model to study the relationship between each stage of credit and the business cycle.At the same time,credit fluctuations,country categories,and other factors have been included in the study of the relationship between the credit cycle and the real economy's cycle so that we can explore the differences of the above relations between the developed and developing countries.In addition,in response to the national initiative of the "the Belt and Road" policy,the countries involved in this policy have also included in the empirical tests to truly grasp the dynamic fluctuation characteristics of the credit cycle and the business cycle at the end of the article so that different governments and financial regulatory authorities put forward different and effective macro-control policies at different cycle stages.Empirical results show:firstly,whether it is a country on a global scale or a country along the "the Belt and Road",the blind expansion of credit does not promote economic performance when it is in a prosperous or recessionary period.In most cases,it will even adversely affect the economic upward trend.Secondly,only when credit is in a stable period,will the moderate expansion of credit play a positive role for the economy.At this time,it is not appropriate to carry out frequent fluctuations in credit.This excessive volatility will have a serious inhibitory effect on the economy.Lastly,the credit of different countries has different impact on the economy at different stages of the credit cycle.During the boom and stabilization period of credit,the credit in developed countries has greater impact on the economy than that in developing countries.