Boom-Bust Cycles in Middle Income Countries : Facts and Explanation

  title={Boom-Bust Cycles in Middle Income Countries : Facts and Explanation},
  author={AARON TORNELL and Frank Westermann},
In this paper we characterize empirically the comovements of macro variables typically observed in middle income countries, as well as the ‘boom-bust cycle’ that has been observed during the last two decades. We find that many countries that have liberalized their financial markets, have witnessed the development of lending booms. Most of the time the boom gradually decelerates. But sometimes the boom ends in twin currency and banking crises, and is followed by a protracted credit crunch that… CONTINUE READING
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