Stories of the Twentieth Century for the Twenty-First

Pierre-Olivier Gourinchas and Maurice Obstfeld

No 17252, NBER Working Papers from National Bureau of Economic Research, Inc

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-codes: E32 E51 F32 F34 G15 G21 (search for similar items in EconPapers)
Date: 2011-07
New Economics Papers: this item is included in nep-cba, nep-his, nep-ifn, nep-mac and nep-opm
Note: EFG IFM
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Citations: View citations in EconPapers (32)

Published as Pierre-Olivier Gourinchas & Maurice Obstfeld, 2012. "Stories of the Twentieth Century for the Twenty-First," American Economic Journal: Macroeconomics, American Economic Association, vol. 4(1), pages 226-65, January.

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Journal Article: Stories of the Twentieth Century for the Twenty-First (2012)
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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