Costs of financial instability , household-sector balance sheets and consumption

  title={Costs of financial instability , household-sector balance sheets and consumption},
  author={R. A. E. Barrell and Ezra Philip Davis and Olga Pomerantz},
Extant work on costs of financial instability focuses on fiscal costs and declines in aggregate GDP following banking crises. We estimate effects of banking and currency crises on consumption in 19 OECD countries, showing consumption plays an important role in the adjustment following a crisis, and effects are not captured solely by the impact of crises on standard consumption determinants, income and wealth. Additional effects, attributable to factors such as time-varying confidence… CONTINUE READING


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