1980s 43 1990s 66 Incidence of Banking Crises Banking Crises Since 1974.

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Unit 3: Aggregate Demand and Supply and Fiscal Policy
Unit 3: Aggregate Demand and Supply and Fiscal Policy

Unit 3: Aggregate Demand and Supply and Fiscal Policy
Presentation transcript:

1980s s 66 Incidence of Banking Crises

Banking Crises Since 1974

Costs of Banking Crises

China and India Rode the Crisis

GDP Loss during Crises

Stock Market During Crises Stock Market During Crises

Growth in Developing Countries

Slowdown in World Growth

East Asian Exchange Rates $US/Foreign Currency

GDP Growth in Crisis Countries*

Real Wages during Crises

Crisis Unemployment Rates

Causes and Blame (…enough to go around…) Mahatir - Speculative Hedge Funds Suharto - Misguided Policy Interventions and exaggerated claims of government malfeasance Others - Crony capitalism, lack of transparency, faulty banking systems, inadequate regulatory environment Element of Truth in All of The Above

Impact is Felt in Four Major Areas Fall in the Demand for Labour Decrease in Real Wages Reduction in Public Spending Because of Revenue Falls Social and Political Upheaval