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ZEPPELIN Chair of International Economics

Research Projects

Financial Development and Business Cycle Volatility in OECD Countries

Project Description

In this paper, we study empirically the effect of the development of financial systems on the volatility of business cycles based on a sample of OECD countries between 1995 and 2005. We find that countries characterized by developed stock markets experience less volatile business cycles, while the development of banking sectors does not seem to play an important role for macroeconomic volatility. Our results are consistent with the view that developed financial markets help to overcome information frictions and corporate governance issues and thereby dampen the amplitude of fluctuations


Project Duration

from 01.05.2011 through 31.12.2013

Project Head

Prof. Dr. Jarko Fidrmuc

Project Execution


eigenfinanziertes Forschungsprojekt

Project-related Publications

  • Fidrmuc, Jarko / Foster, Neil / Scharler, Johann: Labour Market Rigidities and International Risk Sharing across OECD Countries, Journal of International Money and Finance, 2011, (30): 660 - 677