What’s the Damage? Medium-term Output Dynamics After Banking Crises
IMF Working Papers, November 1, 2009
Source details
- Canonical URL
- What’s the Damage? Medium-term Output Dynamics After Banking Crises
Other formats
Bibliographic details
- Authors: Abdul d Abiad, Petya Koeva Brooks, Irina Tytell, Daniel Leigh, Ravi Balakrishnan
- Published: November 1, 2009
- Series: IMF Working Papers
- DOI: https://doi.org/10.5089/9781451873924.001
Overview
- Title: What’s the Damage? Medium-term Output Dynamics After Banking Crises
- Authors: Abdul d Abiad, Petya Koeva Brooks, Irina Tytell, Daniel Leigh, Ravi Balakrishnan
- Date: November 1, 2009
- Series: Working Paper No. 2009/245
- Pages: 37
Key findings on output dynamics
- Output tends to be depressed substantially following banking crises, with no rebound to the precrisis trend.
- Growth does eventually tend to return to its precrisis rate, with substantial crosscountry variation in outcomes.
- The depressed path of output typically results from reductions of roughly equal proportions in:
- the employment rate,
- the capital-to-labor ratio, and
- total factor productivity.
- Initial conditions strongly associated with medium-run output losses include:
- the short-run change in output,
- the occurrence of a joint banking-and-currency crisis, and
- a high precrisis level of investment.
- Short-run fiscal and monetary stimulus is associated with smaller medium-run deviations of output and growth from the precrisis trend.
Policy implications and interpretations
- Short-run fiscal stimulus is associated with smaller medium-run deviations of output and growth from the precrisis trend.
- Short-run monetary stimulus is associated with smaller medium-run deviations of output and growth from the precrisis trend.
- Addressing the employment rate, the capital-to-labor ratio, and total factor productivity is important because reductions in all three contribute roughly equally to the depressed output path.
Subject tags and keywords (as provided)
- Subject: Banking crises, Currency crises, Financial crises, Structural reforms, Total factor productivity
- Keywords: crisis trend, growth performance, investment share result, output dynamics, output loss, severity control variable, WP