Stories of the Twentieth Century for the Twenty-First

Pierre-Olivier Gourinchas and Maurice Obstfeld

American Economic Journal: Macroeconomics, 2012, vol. 4, issue 1, 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)

JEL-codes: E44 F34 F44 G01 G21 O19 (search for similar items in EconPapers)
Date: 2012
Note: DOI: 10.1257/mac.4.1.226
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Citations: View citations in EconPapers (519)

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Related works:
Working Paper: Stories of the Twentieth Century for the Twenty-First (2011)
Working Paper: Stories of the Twentieth Century for the Twenty-First (2011)
Working Paper: Stories of the Twentieth Century for the Twenty-First (2011)
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