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Lessons from World Bank Research on Financial Crises

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  • Research Group, Development

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    (The World Bank)

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    Abstract

    The benefits of financial development and globalization have come with continuing fragility in financial sectors. Periodic crises have had real but heterogeneous welfare impacts and not just for poor people; indeed, some of the conditions that foster deep and persistent poverty, such as lack of connectivity to markets, have provided a degree of protection for the poor. Past crises have also had longer-term impacts for some of those affected, most notably through the nutrition and schooling of children in poor families. As in other areas of policy, effective responses to a crisis require sound data and must take account of incentives and behavior. An important lesson from past experience is that the short-term responses to a crisis -- macroeconomic stabilization, trade policies, financial sector policies and social -- cannot ignore longer-term implications for both economic development and vulnerability to future crises.

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    Bibliographic Info

    Paper provided by The World Bank in its series Policy Research Working Paper Series with number 4779.

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    Length: 33 pages
    Date of creation: 01 Dec 2008
    Date of revision:
    Handle: RePEc:wbk:wbrwps:4779

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    Keywords: Financial crisis; macroeconomic response; social protection; poverty; safety nets;

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