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Real and Financial Cycles in Euro Area Economies: Results from Wavelet Analysis

  • Michael Scharnagl and Martin Mandler EMAIL logo


We study the within-country dimension of financial cycles in the four largest euro area economies using tools from wavelet analysis. We focus on credit and house price cycles which are most commonly used to represent the financial cycle. With the exception of Germany, the variables contain important common cycles within each country close to the upper bound of business cycle length and beyond which can be interpreted as financial cycles. These cycles are closely linked to domestic cycles in real activity showing financial and real economic cycles as interconnected phenomena. For these common cycles, credit and house prices lag real GDP.

JEL Classification: C30; E32; E51; F36


We are indebted to António Rua and an anonymous referee for helpful comments and discussions. Parts of this paper were previously circulated as an unpublished manuscript titled “Financial cycles in the euro area: a wavelet analysis”. This paper represents the authors’ personal opinions and does not necessarily reflect the views of the Deutsche Bundesbank or the Eurosystem.


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Article note

This article is part of the special issue “20 Years of European Monetary Union” published in the Journal of Economics and Statistics. Access to further articles of this special issue can be obtained at

Received: 2019-05-06
Revised: 2019-06-17
Accepted: 2019-06-24
Published Online: 2019-08-07
Published in Print: 2019-09-25

© 2019 Oldenbourg Wissenschaftsverlag GmbH, Published by De Gruyter Oldenbourg, Berlin/Boston

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