Three members of the Research Department of the International Monetary Fund have posted
at VOX.eu. They cite useful data about credit, house price, and equity price and trace correlations among cycles. May not be not Minsky, but it's a step in the right direction.
What are the main lessons and policy implications?Our study takes a first step in exploring financial cycles and documents two major features of these episodes:• Financial cycles can be long and deep, especially those in housing and equity markets.• Financial cycles accentuate each other and become magnified, especially during coincident cyclical episodes in credit and housing markets.Our analysis suggests that it is important to account for the interactions among cycles in different financial market segments when designing regulatory policies aimed at ensuring the overall health of the financial system, especially in terms of the design of macroprudential rules. For example, our results indicate that, as cycles in credit and housing markets tend to enhance each other, if both credit and house prices are growing rapidly, then it might be necessary to employ stricter rules and standards for mortgage lending as well as larger countercyclical buffers to moderate fluctuations in banks’ capital positions.