Tuesday, 24 January 2017

Capital-Based Credit Cycle Analysis

By Antony P. Mueller,

Abstract
Capital-based credit cycle analysis links business activity to economic growth and closes
the gap between the short and the long run. This approach reinstates capital as a crucial
variable of macroeconomics. Capital connects the neoclassical growth theory with money
in a model derived from the equation exchange. Based on a strict distinction between the
monetary and the real variables, the capital-based credit cycle model provides a tool for
identifying the various stages of the business cycle in its relation to liquidity, savings and
capital accumulation. As a device for teaching and research, the model offers a consistent
analytical framework that will serve as a complement to the standard models of
macroeconomics.

Read the research paper here.

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