Working Paper: NBER ID: w21350
Authors: Carmen M. Reinhart
Abstract: Some of the best-known papers of Carlos F. Díaz Alejandro were about Latin America’s crises in the 1980s and 1930s. I will show data, figures and evidence here about the crises in the advanced economies 30 years later that fit the same narrative. His unadulterated words aptly describe modern problems across geographical borders and, in this case, income levels. This attests to his timeless insight and understanding. Because some of the observations he made have general applicability to the study of recurring patterns across crises, I have taken the liberty to label these as lessons.
Keywords: Financial Crises; Latin America; Economic Policy
JEL Codes: B26; E5; E6; F3; G01
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| serious domestic moral hazard problem (H84) | financial crises (G01) |
| government intervention encourages risk-taking among financial institutions (G28) | financial crises (G01) |
| deposit insurance perceptions (G28) | risk-taking behavior (D91) |
| external moral hazard problem (D82) | financial crises (G01) |
| regulatory failures (G18) | increased risk in the financial sector (F65) |
| inconsistent incentives in the financial sector (G29) | macroeconomic crises (E66) |
| financial liberalization did not lead to higher domestic savings (O16) | macroeconomic crises (E66) |