Working Paper: NBER ID: w19823
Authors: Carmen M. Reinhart; Kenneth S. Rogoff
Abstract: We examine the evolution of real per capita GDP around 100 systemic banking crises. Part of the costs of these crises owes to the protracted nature of recovery. On average, it takes about eight years to reach the pre-crisis level of income; the median is about 6 ½ years. Five to six years after the onset of crisis, only Germany and the US (out of 12 systemic cases) have reached their 2007-2008 peaks in real income. Forty-five percent of the episodes recorded double dips. Postwar business cycles are not the relevant comparator for the recent crises in advanced economies.
Keywords: Financial Crises; Economic Recovery; Real Per Capita GDP; Systemic Banking Crises
JEL Codes: E32; E44; F44; G01; N10; N20
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| Systemic banking crises (F65) | Declines in per capita GDP (O49) |
| Systemic banking crises (F65) | Protracted recovery in per capita GDP (O57) |
| Protracted recovery in per capita GDP (O57) | Double dips in economic activity (E20) |
| Systemic banking crises (F65) | Complicated recovery trajectory (C32) |
| Systemic banking crises (F65) | Economic downturns (E32) |