Recessions, Growth and Financial Crises
AbstractWe examine the relationship of banking crises with economic growth and recessions. Our data cover 21 economies from around the world, most from 1870 to 2009 with the rest starting in 1901 or earlier. The data include capital investment and human capital formation. We have two major findings. First, there is very large heterogeneity in growth of Gross Domestic Product (GDP) and capital investment after banking crises. Most strikingly, twenty-five percent of counties experience no decrease in real GDP per capita in the year of the crisis or the following two years. Some countries see an increase in long run growth after a crisis while others see a fall, with no clear overall pattern. Second, we find clear evidence consistent with Zarnowitz’s Law. If there is a contraction in economic activity after a banking crisis, larger decreases in real GDP per capita are followed by faster subsequent growth.
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Bibliographic InfoPaper provided by University Library of Munich, Germany in its series MPRA Paper with number 48843.
Date of creation: May 2013
Date of revision: Oct 2012
financial crises; banking crises; recessions; Zarnowitz's Law; Zarnowitz's rule;
Find related papers by JEL classification:
- E32 - Macroeconomics and Monetary Economics - - Prices, Business Fluctuations, and Cycles - - - Business Fluctuations; Cycles
- E44 - Macroeconomics and Monetary Economics - - Money and Interest Rates - - - Financial Markets and the Macroeconomy
- G01 - Financial Economics - - General - - - Financial Crises
This paper has been announced in the following NEP Reports:
- NEP-ALL-2013-08-10 (All new papers)
- NEP-FDG-2013-08-10 (Financial Development & Growth)
- NEP-HIS-2013-08-10 (Business, Economic & Financial History)
- NEP-MAC-2013-08-10 (Macroeconomics)
- NEP-OPM-2013-08-10 (Open Economy Macroeconomic)
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