ECON 319 Lecture Notes - Lecture 7: Government Debt, Credit Cycle, Consumption Smoothing
9 Feb 2017
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Document Summary
Real per capital gdp growth rates are significantly lower during the decade following severe financial crises and the existing world wide shocks. The median post financial crises gdp growth decline in advanced economies is about 1% In the ten-year window following severe financial crises, unemployment rates are significantly higher than in the decade that precede the crises. Figure above shows a variety of crises and the impact that they had on the bcdi index. Bcdi index stands for banking, currency, debt and inflation crises index: when stock market crashes are added to bcdi composite, we call it bcdi + For colonies: inflation and banking crises predate independence but sovereign debt crises, whether internal or external is not possible for a colony. Many colonies did not have their own currency. Banking crises have emerged as asset price bubbles erupted and high degrees of leverage became exposed. Currency crashes against the us dollar during 2008 in advanced economies took on.
