Politikoptionen für langfristiges Wachstum unter Berücksichtigung komplexer Finanzmärkte (Policy Options for Sustaining Long-term Growth in the Presence of Complex Financial Markets and a Financialised Economy)
Completed research studies
Commissioned by: Vienna University of Economics and Business
Study by: Austrian Institute of Economic Research – Vienna University of Economics and Business
Closed: 2019
Research group:Macroeconomics and Public Finance
Language:German
Policy Options for Sustaining Long-term Growth in the Presence of Complex Financial Markets and a Financialised Economy
Large and complex financial markets have been an increasing source of concern in regard to sustainable long-term growth and
financial stability. The aim of our research is to systematically explore this topic by constructing a novel macroeconomic
model which incorporates the endogenous dynamics of the creation, valuation and distribution of financial assets and their
repercussions on the real economy. Our model includes complex financial markets and a large shadow banking sector, which enables
us to simultaneously address issues concerning economic growth, asset price inflation, pro-cyclical leverage effects, and
financial fragility in the Euro area. These phenomena lead to business cycles induced by financial markets, which we label
"Kindleberger cycles". We calibrate the model to recent economic developments in the Euro area and use it to evaluate policy
options to foster sustainable long-term economic growth, accounting for the boundary problem in financial regulation.
