Money matters... but so does finance Starting with the link between money and economic activity, this study shows how today's financial systems have shaped the way that monetary policy is transmitted to the real economy. The information gathering and decisionmaking processes within the financial system play a key role in determining both how credit is allocated and how the risks implied by credit are borne. The study points to what went wrong during the credit boom of the 2000s, which was the counterpart to a huge accumulation of savings, concentrated mainly in emerging economies. This accumulation could well continue. Making better use of the coming savings is a challenge that authorities will have to meet if they want finance to better serve the real economy.

#1 New York Times Bestseller “Significant...The book is both instructive and surprisingly moving.” —The New York Times Ray Dalio, one of the world’s most successful investors and entrepreneurs, shares the unconventional principles that he’s developed, refined, and used over the past forty years to create unique results in both life and business—and which any person or organization can adopt to help achieve their goals. In 1975, Ray Dalio founded an investment firm, Bridgewater Associates, out of his two-bedroom apartment in New York City. Forty years later, Bridgewater has made more money for its clients than any other hedge fund in history and grown into the fifth most important private company in the United States, according to Fortune magazine. Dalio himself has been named to Time magazine’s list of the 100 most influential people in the world. Along the way, Dalio discovered a set of unique principles that have led to Bridgewater’s exceptionally effective culture, which he describes as “an idea meritocracy that strives to achieve meaningful work and meaningful relationships through radical transparency.” It is these principles, and not anything special about Dalio—who grew up an ordinary kid in a middle-class Long Island neighborhood—that he believes are the reason behind his success. In Principles, Dalio shares what he’s learned over the course of his remarkable career. He argues that life, management, economics, and investing can all be systemized into rules and understood like machines. The book’s hundreds of practical lessons, which are built around his cornerstones of “radical truth” and “radical transparency,” include Dalio laying out the most effective ways for individuals and organizations to make decisions, approach challenges, and build strong teams. He also describes the innovative tools the firm uses to bring an idea meritocracy to life, such as creating “baseball cards” for all employees that distill their strengths and weaknesses, and employing computerized decision-making systems to make believability-weighted decisions. While the book brims with novel ideas for organizations and institutions, Principles also offers a clear, straightforward approach to decision-making that Dalio believes anyone can apply, no matter what they’re seeking to achieve. Here, from a man who has been called both “the Steve Jobs of investing” and “the philosopher king of the financial universe” (CIO magazine), is a rare opportunity to gain proven advice unlike anything you’ll find in the conventional business press.

While the recent economic crisis was a painful period for many Americans, the panic surrounding the downturn was fueled by an incomplete understanding of economic history. Economic hysteria made for riveting journalism and effective political theater, but the politicians and members of the media who declared that America was in the midst of the greatest financial calamity since the Great Depression were as wrong and misguided as the expansionists of the Roosevelt era. In reality the cyclical nature of market economies is as old as the markets themselves. In a free market system, financial downturns inevitably accompany economic prosperity-but the overall trend is upward progress in living standards and national wealth. While it is helpful to understand what caused the recent crisis, the more important questions to consider are 'What makes the 'boom and bust' cycle so predictable?' and 'What are the ethical responsibilities of the citizens of a free market economy?' In Boom and Bust: Financial Cycles and Human Prosperity, Alex J. Pollock argues that while economic downturns can be frightening and difficult, people living in free market economies enjoy greater health, better access to basic necessities, better education, work less arduous jobs, and have more choices and wider horizons than people at any other point in history. This wonderful reality would not exist in the absence of financial cycles. This book explains why.

Traditionally, economic growth and business cycles have been treated independently. However, the dependence of GDP levels on its history of shocks, what economists refer to as “hysteresis,” argues for unifying the analysis of growth and cycles. In this paper, we review the recent empirical and theoretical literature that motivate this paradigm shift. The renewed interest in hysteresis has been sparked by the persistence of the Global Financial Crisis and fears of a slow recovery from the Covid-19 crisis. The findings of the recent literature have far-reaching conceptual and policy implications. In recessions, monetary and fiscal policies need to be more active to avoid the permanent scars of a downturn. And in good times, running a high-pressure economy could have permanent positive effects.

This paper reviews the literature on financial crises focusing on three specific aspects. First, what are the main factors explaining financial crises? Since many theories on the sources of financial crises highlight the importance of sharp fluctuations in asset and credit markets, the paper briefly reviews theoretical and empirical studies on developments in these markets around financial crises. Second, what are the major types of financial crises? The paper focuses on the main theoretical and empirical explanations of four types of financial crises—currency crises, sudden stops, debt crises, and banking crises—and presents a survey of the literature that attempts to identify these episodes. Third, what are the real and financial sector implications of crises? The paper briefly reviews the short- and medium-run implications of crises for the real economy and financial sector. It concludes with a summary of the main lessons from the literature and future research directions.

Gain the knowledge and skills that can help you exploit instability. No book can help you construct foolproof forecasting systems that will ensure you'll accurately predict economic turning points every time. But with Niemira and Klein's Forecasting Financial and Economic Cycles on hand, you'll be able to significantly strengthen your ability to measure, monitor, and forecast important fluctuations. Part history, it provides you with essential background material on the characteristics and causes of economic volatility. It offers accessible coverage of the classical business cycle, the five basic types of economic cycles as determined by leading economists, and evolving ideas on the forces driving instability—ranging from simple unicausal theories, more complex Keynesian theory, to new classical macroeconomics. In addition, its concise review of America's economic past highlights the lessons that can be learned from the various cycles experienced since shortly before World War II. Part handbook, Forecasting Financial and Economic Cycles presents the full spectrum of statistical techniques used to measure cycles, trends, seasonal patterns, and other vital changes, offering you step-by-step guidance on applying a specific method and detailing its uses and limitations. It goes on to show how youcan adapt particular techniques to assess, track, and predict: Industry cycles—including an objective, tailor-made forecasting tool Regional business cycles—including a survey of regional indicators International business cycles—with an international business cycle chronology Inflation cycles—plus "12 little-known facts" about this complex cycle Financial cycles—covering credit, monetary, and interest rate cycles Stock market cycles—with advice on achieving more disciplined trading Based on outstanding scholarship and years of practical experience, Forecasting Financial and Economic Cycles will serve as an invaluable tool for practitioners like you whose decision-making—and profit margin—depend on accurately assessing today's often uncertain economic climate. "Forecasting Financialand Economic Cycles provides a lively survey of the many ways that cyclical economic activity has been dissected and analyzed. With this book, an astute reader may even be able to anticipate the next cyclical turn." —Samuel D. Kahan, Chief Economist Fuji Securities, Inc. "The definitive book on the most important and enduringfeature of an often mist-bound economic landscape: the business cycle." —Alfred L. Malabre, Jr., Economics Editor, The Wall Street,Journal "Niemira and Klein cover both the theory of economic cyclesand methods for forecasting them. They provide one of the most comprehensive and current reviews of academic studies of economic cycles to be found anywhere." —Anthony F. Herbst, Professor of Finance, The University of Texas at El Paso "This book succeeds as a comprehensive, balanced, and accessible treatment of fluctuations in economic and financial activity. It should prove useful to all those in industry and finance who wish to understand and analyze the trends and changes in the modern dynamic economy." —Victor Zarnowitz, Professor Emeritus of Economics and Finance, University of Chicago