ROMANIA IN A POST-CREDIT CRUNCH WORLD? A CAUTIONARY TALE FROM AUSTRALIA AND AMERICA

Carmen Costea () and Steve Keen

Journal for Economic Forecasting, 2009, vol. 6, issue 1, 16-35

Abstract: We present data on debt accumulation in Australia and the United States, and tentative data on Romania, to pose the question of whether Romania might experience a credit crunch as a result of the US subprime financial crisis. We develop a model of a credit crunch in a pure credit economy with endogenous money creation to show how changes in bank lending practices and borrower repayment behaviour can bring about an economic decline.

Keywords: Macroeconomics; Monetary Policy; Debt Deflation; Financial Instability (search for similar items in EconPapers)
JEL-codes: E12 E21 E31 E44 E51 E52 E63 E66 (search for similar items in EconPapers)
Date: 2009
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Citations: View citations in EconPapers (1)

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Persistent link: https://EconPapers.repec.org/RePEc:rjr:romjef:v:6:y:2009:i:1:p:16-35

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