The credit cycle has a bearing on the ease with which governments can consolidate their finances, according to research published on May 17, by the Bank for International Settlements.

The working paper, Assessing fiscal policy through the lens of the financial and the commodity price cycles, finds credit cycles have a “substantial impact” on fiscal policy. The commodity cycle also matters for some economies, but is of a “much lower dimension”, say authors Enrique Alberola-Ila and Ricardo Sousa