TY  - BOOK
AU  - Ranciere,Romain
AU  - Tornell,Aaron
AU  - Westermann,Frank
ED  - National Bureau of Economic Research.
TI  - Systemic Crises and Growth
T2  - NBER working paper series
PY  - 2005///
CY  - Cambridge, Mass.
PB  - National Bureau of Economic Research
N1  - January 2005; Hardcopy version available to institutional subscribers
N2  - In this paper, we document the fact that countries that have experienced occasional financial crises have, on average, grown faster than countries with stable financial conditions. We measure the incidence of crisis with the skewness of credit growth, and find that it has a robust negative effect on GDP growth. This link coexists with the negative link between variance and growth typically found in the literature. To explain the link between crises and growth we present a model where contract enforce-ability problems generate borrowing constraints and impede growth.  In the set of financially liberalized countries with a moderate degree of contract enforceability, systemic risk-taking relaxes borrowing constraints and increases investment.  This leads to higher mean growth, but also to greater incidence of crises.  We find that the negative link between skewness and growth is indeed strongest in this set of countries, validating the restrictions imposed by the model's equilibrium
UR  - https://www.nber.org/papers/w11076
UR  - http://dx.doi.org/10.3386/w11076
ER  -