Understanding Global Crises: An Emerging Paradigm

Financial crises have some common storylines, among them bursting asset bubbles, bank failures, sharp tightening of credit, and downturn in trade. They are also different from one another. Some start with sudden reversal of international capital flows, others with domestic credit implosions. A challenge to economic research is to integrate common as well as disparate threads into a coherent analytical framework that is at the same time empirically testable. In Understanding Global Crises, Assaf Razin offers a review of an emerging paradigm that is consistent with the key features of recent global financial crises. This paradigm presents in a transparent way basic analytical elements of the theories of financial and monetary crises and how these elements fit together in macroeconomic analysis of global crises.