Discussion paper

DP15958 One Ring to Rule Them All? New Evidence on World Cycles

We estimate world cycles using a new quarterly macro-financial dataset assembled using IMF archives, covering a large set of countries since 1950. World cycles, real and financial, exist and US shocks drive them. But their strength is modest for GDP and credit. Global financial cycles are much weaker for credit than for asset prices. We also challenge the view that synchronization has increased with globalization. Although this is true for prices (goods and assets), it is not for quantities (output and credit). World business and credit cycles were as strong during Bretton Woods (1950-1972) as during the Globalization period (1982-2006). We investigate the economic and financial forces driving our results, connect them to the existing literature and discuss important policy implications.


Monnet, E and D Puy (2021), ‘DP15958 One Ring to Rule Them All? New Evidence on World Cycles‘, CEPR Discussion Paper No. 15958. CEPR Press, Paris & London. https://cepr.org/publications/dp15958