Stephen Cecchetti, Kim Schoenholtz, 09 July 2018

Pierre-Olivier Gourinchas, Thomas Philippon, Dimitri Vayanos, 05 August 2016

The Greek crisis is one of the worst in history, even in the context of recorded ‘trifecta’ crises – the combination of a sudden stop with output collapse, a sovereign debt crisis, and a lending boom/bust. This column quantifies the role of each of these factors to better understand the crisis and formulate appropriate policy responses. While fiscal consolidation was important in driving the drop in output, it accounted for only for half of that drop. Much of the remainder can be explained by the higher funding costs of the government and private sectors due to the sudden stop. 

Richard Baldwin, Francesco Giavazzi, 07 September 2015

The EZ Crisis is a long way from finished. The latest VoxEU eBook presents a consensus view of what caused the Crisis and why. It argues that this was a classic ‘sudden stop’ crisis – not a public-debt crisis. Excessive, cross-border lending and borrowing among EZ members in the pre-Crisis years – much of which ended up in non-traded sectors – was why Greece’s deficit deceit in 2009 could trigger such a massive crisis. The ultimate causes were policy failures that allowed the imbalances to get so large, a lack of institutions to absorb shocks at the EZ level, and poor crisis management.

Carmen Reinhart, Takeshi Tashiro, 17 December 2013

Financial crises cast a long shadow on investment. For nine major Asian economies, average investment as a share of GDP declined sharply during 1998-2012 from its average in the decade before the Asian crisis (if China and India are excluded, the estimated decline exceeds 9%). This column suggests that there is a connection between the sustained reserve accumulation and the significantly lower levels of investment in the region.

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