Globalization and Evolving Nature of Financial Crises
The remainder of the paper is organized as follows: Section 1 discusses the Third World debt crisis, showing that government policies in both creditor and debtor countries pursued in the changing macroeconomic context provided fuel for the formation of a bubble. Section 2 looks at the East Asian financial crisis and the speed of turnaround despite huge economic welfare losses. Section 3 examines developments leading to the current crisis and provides empirical evidence that the current crisis is "made in the U.S." and has nothing to do with legendary greed or, to paraphrase Ackerlof and Schiller (2009), animal spirits. Section 4 concludes. (fragment of text)
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