EconPapers    
Economics at your fingertips  
 

SHOCKS, CRISES, AND THEIR DETERMINANTS

Justin Yifu Lin ()
Additional contact information
Justin Yifu Lin: The World Bank, 1818 H Street, NW Washington, DC, 20433, USA

Middle East Development Journal (MEDJ), 2010, vol. 02, issue 02, 159-176

Abstract: The current global financial crisis is the most serious both in terms of magnitude and in terms of scope since the Great Depression. No country has been immune to the economic slowdown. In advanced economies, the financial crisis and the global recession that followed the burst of the global financial bubble have brought severe consequences in terms of employment and output. In developing countries, output contraction, growth slowdown, and rising unemployment have come hand in hand with higher borrowing costs, sluggish export growth, and a significant reduction in international capital flows. As a result, poverty has increased. The global financial crisis has left lasting effects on the structure of financial markets, international capital flows, and the cost of capital for developing countries. The efforts of governments and international financial institutions to buffer the impact of the crisis have been quick and aimed in the right direction. However, many risks remain for the road to recovery. This paper provides a brief explanation of how the current global financial crisis originated, and the underlying factors that turned a relatively small collapse in the subprime mortgage market in the United States into a global crisis. It also explores similarities and differences between the current crisis and past experiences. This comparison can provide a better understanding of the main determinants and transmission mechanisms involved, which can help in the design of a better response to the current situation on the one hand, and in the prevention of future crises or minimizations of their impact on the other. Finally, the paper discusses lessons that can be learned for developing countries, focusing on the policies that governments can implement to mitigate the effects of crises and factors that are important for reducing the risks of experiencing a crisis.

Keywords: Cause of crisis; bubble; development strategy; excess capacity; poverty (search for similar items in EconPapers)
Date: 2010
References: View references in EconPapers View complete reference list from CitEc
Citations: Track citations by RSS feed

Downloads: (external link)
http://www.worldscientific.com/doi/abs/10.1142/S1793812010000216
Access to full text is restricted to subscribers

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:wsi:medjxx:v:02:y:2010:i:02:n:s1793812010000216

Ordering information: This journal article can be ordered from

DOI: 10.1142/S1793812010000216

Access Statistics for this article

Middle East Development Journal (MEDJ) is currently edited by Lyn Squire

More articles in Middle East Development Journal (MEDJ) from World Scientific Publishing Co. Pte. Ltd.
Bibliographic data for series maintained by Tai Tone Lim ().

 
Page updated 2021-01-15
Handle: RePEc:wsi:medjxx:v:02:y:2010:i:02:n:s1793812010000216