Role of Financial Markets in Generating Business Cycles

This study presents the results of an empirical investigation of the nature and causes of aggregate economic fluctuations, focusing on the link between changes in corporate financial positions and macroeconomic fluctuations.

“. . . a useful contribution to the study of macroeconomic dynamics. Much of the literature is concerned with linear models, but this study makes clear the limitations of that analysis. Importantly it also seeks to link up the asymmetries to the underlying microeconomic processes, in doing so linking in with recent theoretical advances in understanding the role of financial factors in company and aggregate economic behaviour. This book is well written and I can confidently predict that it will be widely read by those working in the area.” – Charles Bean

“Dr. Stanca carefully and rigorously works out the role of credit in business cycle research and shows why linear models of the cycle may miss important features of the data. He backs up his research with extensive investigations of the nature of business cycles and their asymmetric (non-linear) properties. . . . makes a complete and jointed piece of work, first pointing out the problem of symmetric behavior and then offering a solution. The work is written to a high standard and contains discussion of the relevant literature, placing it in context. It is a useful contribution to the study of short-run macro dynamics and many macroeconomists will want to have a copy on their desks.” – Christopher Pissarides