Comparative Analysis Of Financial Cycle And Business Cycle

In the research of scholars,there have been many research results on the business cycle,but the study on the financial cycle is not enough.Because of financial fluctuations will cause economic fluctuations,especially the financial crisis will have a serious negative impact on the economy.Therefore,it is necessary to study the financial cycle.After the subprime crisis in 2008,the study of the financial cycle became a hot topic.However,most scholars only consider the credit cycle,the housing market cycle or the stock market cycle as the financial cycle,and only a few scholars combine these three cycles as the financial cycle.Combining these three cycles as a financial cycle and taking into account that there are a lot of research results in the business cycle,this article compares the financial cycle with the business cycle to make a study of the financial cycle.First,this paper uses the improved turning point analysis method of Harding and Pagan(2002a)to identify turning points in the credit cycle,house price cycle,and stock price cycle in countries such as the United States.After identifying turning points in the cycle of these three financial variables,we use Drehmann's(2012)median distance methods and Krolzig's(2001)comprehensive screening method to synthesize three financial variable cycles into one financial cycle,And turning point analysis was also used to identify the turning point of the business cycle.After obtaining the financial cycle and the business cycle,this paper compares the financial cycle with the business cycle and studies the financial cycle from two perspectives.On the one hand,it compares the duration of the financial cycle with the duration of the economic cycle to study the duration of the financial cycle,On the other hand,whether there is a positive dependence on the duration of the financial cycle.This study finds that in most countries the duration of the financial cycle is longer than the economic cycle,indicating that the frequency of the financial cycle is low,the frequency of the economic cycle is high,and the duration of the financial cycle expansion phase is longer than the recession phase,indicating that it is relative to the expansion phase.In fact,the recession is a relatively rapid process.In addition,the fluctuation of the financial cycle duration is greater than the economic cycle,indicating that the duration of the economic cycle is relatively stable.At the same time,the use of Weibull duration model to analyze whether the financial cycle and the duration of the economic cycle has a positive dependence,the study found that the financial cycle and economic cycle expansion and recession there is a positive duration of dependence.These conclusions drawn from this article will help to better understand the financial cycle and thus achieve the goal of financial services for the real economy.