Working Papers

2016-23 | September 2016


Macrofinancial History and the New Business Cycle Facts


In advanced economies, a century-long near-stable ratio of credit to GDP gave way to rapid financialization and surging leverage in the last forty years. This “financial hockey stick” coincides with shifts in foundational macroeconomic relationships beyond the widely-noted return of macroeconomic fragility and crisis risk. Leverage is correlated with central business cycle moments, which we can document thanks to a decade-long international and historical data collection effort. More financialized economies exhibit somewhat less real volatility, but also lower growth, more tail risk, as well as tighter real-real and real-financial correlations. International real and financial cycles also cohere more strongly. The new stylized facts that we discover should prove fertile ground for the development of a new generation of macroeconomic models with a prominent role for financial factors.

Download PDF (pdf, 1.07 mb)

Article Citation

Jorda, Oscar, Moritz Schularick, and Alan M. Taylor. 2016. "Macrofinancial History and the New Business Cycle Facts," Federal Reserve Bank of San Francisco Working Paper 2016-23. Available at