The Length of Financial Cycle and its Impact on Business Cycle in Poland
Purpose: The article aims to identify Poland's financial cycle and verify whether it affects the business cycle. Moreover, the analysis will concern whether these cycles are synchronized and whether the financial cycle led to a crisis or vice versa. Design/Methodology/Approach: Considering Poland's case, we use Beveridge-Nelson multivariate decomposition to estimate the impact of financial cycles on Poland's business cycle during the period 1992:1-2018:4. The data are collected from BIS. Findings: Our research confirms the existence of the financial cycle in Poland. Financial cycles in Poland last on average, 14.1 quarters compare to normal business cycle which is 12.6 quarters. The paper's empirical results show that financial cycles significantly impact Poland's business cycle, influencing long-term growth. Practical Implications: To achieve long-term and sustainable economic growth, policymakers should monitor financial cycles and revise fiscal and monetary policy accordingly. The results should help policymakers and financial practitioners build and maintain a sound financial policy to avoid future financial national and global crises. Originality/Value: This paper is among the first the use a set of econometric filtering techniques to identify financial cycles in Poland and its link to business cycles.