Financial and Business Cycles: Shall We Dance?

Download or read book Financial and Business Cycles: Shall We Dance? written by Gregorio Impavido and published by International Monetary Fund. This book was released on 2024-08-23 with total page 36 pages. Available in PDF, EPUB and Kindle. Book excerpt: This paper examines the role of financial cycle proxies in refining available estimates of the business cycle in Kazakhstan. It contributes to the existing literature by introducing a formal test for the stability of the mean of exogenous variables in the estimation set up, and by developing a self-contained statistical package to streamline the whole estimation process. The empirical strategy is designed to be parsimonious, aiming to avoid the pitfalls associated with overly complex models while achieving comparable results. Results have implications for the extent with which the authorities should manage the business and financial cycles, with which policies, for macroprudential policy calibration, and for the usefulness for policymaking of endsample estimates of the cycle.