Is the financial cycle a leading indicator of real output during expansions and contractions? A quantile analysis for Greece

Costas Karfakis () and Eftychia Karfaki ()
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Costas Karfakis: Department of Economics, University of Macedonia
Eftychia Karfaki: Department of Economics, University of Macedonia

Discussion Paper Series from Department of Economics, University of Macedonia

Abstract: This paper examines the relationship between the financial cycle and real output in Greece. The quantile analysis indicates that the financial cycle is a leading indicator of real output in the upper and lower tails of its conditional distribution, given the presence of other explanatory variables. In addition, in the lower quantile, the real output is driven by changes in perceptions about the performance of the Greek economy. Thus, a rise in the financial cycle along with positive expectations of the private sector about the future prospects of the real economy seems to represent the main driving forces of the Greek economy out of the current depression.

Keywords: Financial cycle; real output; quantile analysis; Granger causality test. (search for similar items in EconPapers)
JEL-codes: C22 E32 E51 E52 F41 (search for similar items in EconPapers)
Date: 2018-02, Revised 2018-02
New Economics Papers: this item is included in nep-eec, nep-fdg, nep-mac and nep-mon
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (2)

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