Working Paper: CEPR ID: DP8264
Authors: Assaf Razin; Steven Rosefielde
Abstract: We survey three distinct types of financial crises which took place in the 1990s and the 2000s: 1) The credit implosion leading to severe banking crisis in Japan; 2) The foreign reserves? meltdown triggered by foreign hot money flight from frothy economies with fixed exchange rate regimes of developing Asian economies, and 3) The 2008 worldwide debacle rooted in financial institutional opacity and reckless aggregate demand management, epi-centered in the US, that spread almost instantaneously across the globe, mostly through international financial networks.
Keywords: deregulation; liquidity trap; shadow banking
JEL Codes: E0; F0; N0
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| credit implosion in Japan (F65) | banking crisis (F65) |
| fluctuations in aggregate demand and supply (E32) | stability of financial institutions (G21) |
| foreign capital flight (F21) | liquidity crisis (G01) |
| deregulatory practices and mismanagement of aggregate demand (E65) | financial instability (F65) |