Stories of the Twentieth Century for the Twenty-First

70 Pages Posted: 29 Jul 2011 Last revised: 20 Feb 2023

See all articles by Pierre-Olivier Gourinchas

Pierre-Olivier Gourinchas

University of California, Berkeley - Department of Economics; University of California, Berkeley - Economic Analysis & Policy Group; National Bureau of Economic Research (NBER); Centre for Economic Policy Research (CEPR)

Maurice Obstfeld

University of California, Berkeley; Peterson Institute for International Economics; National Bureau of Economic Research; Centre for Economic Policy Research

Multiple version iconThere are 2 versions of this paper

Date Written: July 2011

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.

Suggested Citation

Gourinchas, Pierre-Olivier and Obstfeld, Maurice, Stories of the Twentieth Century for the Twenty-First (July 2011). NBER Working Paper No. w17252, Available at SSRN: https://ssrn.com/abstract=1898508

Pierre-Olivier Gourinchas (Contact Author)

University of California, Berkeley - Department of Economics ( email )

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University of California, Berkeley - Economic Analysis & Policy Group ( email )

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Centre for Economic Policy Research (CEPR)

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Maurice Obstfeld

University of California, Berkeley ( email )

530 Evans Hall #3880
Berkeley, CA 94720
United States

HOME PAGE: http://www.mauriceobstfeld.com

Peterson Institute for International Economics ( email )

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Washington, DC 20036
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National Bureau of Economic Research ( email )

1050 Massachusetts Avenue
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Centre for Economic Policy Research ( email )

London
United Kingdom

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