Bubbles and Crises: The Role of House Prices and Credit

– Credit-to-GDP gap best indicator for predicting crises 2-5 years in advance. – Debt service ratios highly successful indicator for predicting crises 1-2 years

The five variables in panel VAR are real GDP growth rate, inflation, private credit growth rate, changes in central bank interest rate, and endogenous changes in reserve

Table 2): (i) banking sector’s share of domestic credit to the non- financial sector, (ii) total banking sector’s assets as a percentage of Norwegian mainland GDP, (iii) banking

Table 3 shows the cross correlations between nominal GDP and credit to households and NPISHs, both measured as the gap of the four-quarter-change. The results indicate that

Thirdly, the paper investigates credit and monetary developments, and concludes that the major financial crises in Norway typically took place after substantial money and

Banks – Connectedness Non-bank financial institutions Households – Leverage Households – Debt service Households – Credit growth Non-financial enterprises – Leverage

US and Canada 3) Other countries.. Total credit 1) mainland Norway as a share of mainland GDP. Deviation from estimated trends. C3 non-financial enterprises comprises C2

The annual gaps in real house prices, real equity prices and investment as a percentage of GDP and credit as a percentage of GDP are calculated using updated figures from