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How Fast Does an Economy Recover after a Currency and Government Debt Crisis?

Author

Listed:
  • Isabel Hanisch
  • Klaus Wohlrabe
  • Timo Wollmershäuser

Abstract

In 2012 the Ifo Institute published a study showing that states that go through a strong currency devaluation start to recover as quickly as two years after the currency crisis and post above-average growth rates. This article expands that study of state debt crises. One of its key results is that haircuts only produce a sustainable economic recovery if accompanied by a sharp external devaluation.

Suggested Citation

  • Isabel Hanisch & Klaus Wohlrabe & Timo Wollmershäuser, 2015. "How Fast Does an Economy Recover after a Currency and Government Debt Crisis?," ifo Schnelldienst, ifo Institute - Leibniz Institute for Economic Research at the University of Munich, vol. 68(13), pages 56-57, July.
    • Handle: RePEc:ces:ifosdt:v:68:y:2015:i:13:p:56-57
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    File URL: https://www.ifo.de/DocDL/ifosd_2015_13_8.pdf
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    References listed on IDEAS

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    1. Carmen M. Reinhart & Kenneth S. Rogoff, 2009. "Varieties of Crises and Their Dates," Introductory Chapters, in: This Time Is Different: Eight Centuries of Financial Folly, Princeton University Press.
    2. Reinhart, Karmen & Rogoff, Kenneth, 2009. ""This time is different": panorama of eight centuries of financial crises," Ekonomicheskaya Politika / Economic Policy, Russian Presidential Academy of National Economy and Public Administration, vol. 1, pages 77-114, March.
    3. Carmen M. Reinhart & Kenneth S. Rogoff, 2014. "This Time is Different: A Panoramic View of Eight Centuries of Financial Crises," Annals of Economics and Finance, Society for AEF, vol. 15(2), pages 215-268, November.
    4. Juan J. Cruces & Christoph Trebesch, 2013. "Sovereign Defaults: The Price of Haircuts," American Economic Journal: Macroeconomics, American Economic Association, vol. 5(3), pages 85-117, July.
    5. Benjamin Born & Teresa Buchen & Kai Carstensen & Christian Grimme & Michael Kleemann & Klaus Wohlrabe & Timo Wollmershäuser, 2012. "Withdrawal of Greece from the European Monetary Union: Historical experience, macroeconomic consequences and organisational implementation," ifo Schnelldienst, ifo Institute - Leibniz Institute for Economic Research at the University of Munich, vol. 65(10), pages 09-37, May.
    6. Carmen M. Reinhart, 2010. "This Time is Different Chartbook: Country Histories on Debt, Default, and Financial Crises," NBER Working Papers 15815, National Bureau of Economic Research, Inc.
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    Cited by:

    1. Martin Schütte, 2015. "Greece Crisis: Dream and Reality," ifo Schnelldienst, ifo Institute - Leibniz Institute for Economic Research at the University of Munich, vol. 68(18), pages 12-17, September.

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    More about this item

    JEL classification:

    • G01 - Financial Economics - - General - - - Financial Crises
    • N20 - Economic History - - Financial Markets and Institutions - - - General, International, or Comparative

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