Financial and Business Cycles in Brazil

Ivo Krznar and Troy Matheson ()

No 2017/012, IMF Working Papers from International Monetary Fund

Abstract: This paper explores the nexus between the financial cycle and business cycle in Brazil. Cycles are estimated using a variety of commonly-used statistical methods and with a small, semistructural model of the Brazilian economy. An advantage of using the model-based approach is that financial and business cycles can be jointly estimated, allowing information from all key economic relationships to be used in a consistent way. The results show that Brazil is now in the downturn phase of the financial cycle. Moreover, the results underscore the importance of macro-financial linkages and highlight risks to the recovery going forward.

Keywords: WP; financial condition; credit growth; financial conditions shock; Financial cycle; business cycle; financial conditions index; credit slowdown; credit shock; credit response; public-sector credit; Credit; Financial cycles; Business cycles; Credit cycles; State-owned banks; Global (search for similar items in EconPapers)
Pages: 28
Date: 2017-01-24
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Citations: View citations in EconPapers (6)

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