American Economic Journal:
Macroeconomics
ISSN 1945-7707 (Print) | ISSN 1945-7715 (Online)
Stories of the Twentieth Century for the Twenty-First
American Economic Journal: Macroeconomics
vol. 4,
no. 1, January 2012
(pp. 226–65)
Abstract
A key precursor of twentieth-century financial crises in emerging and advanced economies alike was the rapid buildup of leverage. Those emerging economies that avoided leverage booms during the 2000s also were most likely to avoid the worst effects of the twenty-first century's first global crisis. A discrete-choice panel analysis using 1973-2010 data suggests that domestic credit expansion and real currency appreciation have been the most robust and significant predictors of financial crises, regardless of whether a country is emerging or advanced. For emerging economies, however, higher foreign exchange reserves predict a sharply reduced probability of a subsequent crisis. (JEL E44, F34, F44, G01, G21, O19)Citation
Gourinchas, Pierre-Olivier, and Maurice Obstfeld. 2012. "Stories of the Twentieth Century for the Twenty-First." American Economic Journal: Macroeconomics, 4 (1): 226–65. DOI: 10.1257/mac.4.1.226Additional Materials
JEL Classification
- E44 Financial Markets and the Macroeconomy
- F34 International Lending and Debt Problems
- F44 International Business Cycles
- G01 Financial Crises
- G21 Banks; Other Depository Institutions; Micro Finance Institutions; Mortgages
- O19 International Linkages to Development; Role of International Organizations
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