Abstract

http://ssrn.com/abstract=1573958
 
 

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The Global Financial Crisis: How Similar? How Different? How Costly?


Stijn Claessens


Board of Governors of the Federal Reserve System (FRB); University of Amsterdam - Finance Group; Centre for Economic Policy Research (CEPR); Tinbergen Institute; European Corporate Governance Institute (ECGI)

M. Ayhan Kose


Development Prospects Group at the World Bank

Marco E. Terrones


International Monetary Fund (IMF)

March 17, 2010


Abstract:     
This paper provides a brief analysis of three major questions raised in the context of the recent global financial crisis. First, how similar is the crisis to previous episodes? We argue that the crisis featured some close similarities to earlier ones, including the presence of credit and asset price booms fueled by rapid debt accumulation. Second, how different is it from earlier episodes? We show that, as much as it displayed some similarities with previous cases, it also featured some significant differences, such as the explosion of opaque and complex financial instruments in a context of highly integrated global financial markets. Third, how costly are recessions that followed these types of crises? Although the latest episode took a very heavy toll on the real economy, we argue that this was not a surprising outcome. In particular, historical comparisons indicate that recessions associated with periods of deep financial disruptions result in much larger declines in real economic activity. We discuss the implications of these findings for economic and financial sector policies and future research.

Number of Pages in PDF File: 34

Keywords: Global financial crisis, Similarities, Differences, Cost, Recessions

JEL Classification: E32, E44, E51, F42


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Date posted: March 23, 2010  

Suggested Citation

Claessens, Stijn and Kose, M. Ayhan and Terrones, Marco E., The Global Financial Crisis: How Similar? How Different? How Costly? (March 17, 2010). Available at SSRN: http://ssrn.com/abstract=1573958 or http://dx.doi.org/10.2139/ssrn.1573958

Contact Information

Stijn Claessens
Board of Governors of the Federal Reserve System (FRB) ( email )
20th Street and Constitution Avenue NW
Washington, DC 20551
United States
University of Amsterdam - Finance Group ( email )
Roetersstraat 18
Amsterdam, 1018 WB
Netherlands
+31 20 525 6020 (Phone)
+31 20 525 5285 (Fax)
HOME PAGE: http://www.fee.uva.nl/fm/index.htm
Centre for Economic Policy Research (CEPR)
77 Bastwick Street
London, EC1V 3PZ
United Kingdom
Tinbergen Institute ( email )
Burg. Oudlaan 50
Rotterdam, 3062 PA
Netherlands
European Corporate Governance Institute (ECGI)
c/o ECARES ULB CP 114
B-1050 Brussels
Belgium
HOME PAGE: http://www.ecgi.org
M. Ayhan Kose (Contact Author)
Development Prospects Group at the World Bank ( email )
1818 H Street, NW
Washington, DC 20433
United States
Marco E. Terrones
International Monetary Fund (IMF) ( email )
700 19th Street NW
Washington, DC 20431
United States
202-623-4329 (Phone)
HOME PAGE: http://imf.org/external/np/CV/AuthorCV.aspx?AuthID=171
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References:  40
Citations:  5

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