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This paper examines the aftermath of postwar financial crises in advanced countries. We construct a new semiannual series on financial distress in 24 OECD countries for the period 1967-2012. The series is based on assessments of the health of countries' financial systems from a consistent, real-time narrative source, and classifies financial distress on a relatively fine scale. We find that the average decline in output following a financial crisis is statistically significant and persistent, but only moderate in size. More important, we find that the average decline is sensitive to the specification and sample, and that the aftermath of crises is highly variable across major episodes. A simple forecasting exercise suggests that one important driver of the variation is the severity and persistence of financial distress itself. At the same time, we find little evidence of nonlinearities in the relationship between financial distress and the aftermaths of crises. (JEL E32, E44, G01, N10, N20) [ABSTRACT FROM AUTHOR]

During the last three decades government debt has increased in most developed countries. During the same period we have also observed a significant liberalization of international financial markets. We propose a multicountry model with incomplete markets and show that governments may choose higher levels of debt when financial markets become internationally integrated. We also show that public debt increases with the volatility of uninsurable income (idiosyncratic risk). To the extent that the increase in income inequality observed in some industrialized countries has been associated with higher idiosyncratic risk, the paper suggests another potential mechanism for the rise in public debt. (JEL D31, E62, F65, H63) [ABSTRACT FROM AUTHOR]

We examine the evolution of real per capita GDP around 100 systemic banking crises. Part of the costs of these crises owes to the protracted nature of recovery. On average, it takes about 8 years to reach the pre-crisis level of income; the median is about 6.5 years. Five to six years after the onset of crisis, only Germany and the United States (out of 12 systemic cases) have reached their 2007-2008 peaks in real income. Forty-five percent of the episodes recorded double dips. Post-war business cycles are not the relevant comparator for the recent crises in advanced economies. [ABSTRACT FROM AUTHOR]

From 1980 to 1992, emerging and developing countries grew by 3.4 percent per year. Their annual rate of growth increased to 5.4 percent between 1993 and 2012. No such increase occurred for advanced nations, whose average growth from 1980 to 2012 was roughly constant (excluding the impact of the 2008-2009 Recession). Developing nations turned themselves around by embracing discipline-sustained commitment to a pragmatic and flexible growth strategy. Three illustrations of discipline through the lens of trade, fiscal, and debt reforms in the developing world offer relevant, practical lessons for recovery in advanced economies and continued catch-up growth in developing nations. [ABSTRACT FROM AUTHOR]

The article considers historical economic data spanning approximately 200 years for 44 countries to consider the effects of increased public or government debt on economic growth. The article compares and contrasts economic models for both rich countries and emerging markets, or developing countries. Some of the countries considered include the U.S., Ireland, Norway, Chile, and India. Other subjects discussed include GDP (Gross Domestic Product), inflation, and government sponsored economic stimulus efforts to reduce the effect of the global financial crisis of 2007-2009.

The dynamics of production and income growth across countries, or across regions within the same country, are often thought to give evidence on whether returns to accumulation are increasing, constant or decreasing at the local level. When poor countries or regions are found to grow no faster than richer ones, such lack of convergence is viewed as unfavorable evidence for models in which technology offers high returns to accumulation in relatively capital-poor locations increasing if the reference theoretical model takes technology to be uniform across locations, features unexplained and permanent differences in saving behavior and eliminates or limits capital mobility across locations. The theory that motivates empirical work on income convergence either takes saving propensities as exogenously given or else models them in terms of individual optimization under certainty. When individuals optimize their savings in light of the size and composition of their accumulated and non-accumulated income sources consumption-smoothing behavior leads to persistent, but station a dynamics for relative incomes and consumption levels.

This article reports on the slowing down of economic growth after 1973. For the past hundred years the rate of growth of output in the developing world has depended on the rate of growth of output in the developed world. When the developed grow fast, the developing grow fast, and when the developed slow down, the developing slow down. The world has just gone through two decades of unprecedented growth, with world trade growing twice as fast as ever before, at about 8 percent per annum in real terms, compared with 0.9 percent between 1913 and 1939. The extraordinary growth rates of the two decades before 1973 surprised everybody. Some people were even more surprised by the performance of the least developed countries. The fact that world trade was growing rapidly was not universally recognized until the second half of the 1960's. Then nearly every country discovered the virtues of exporting. Since 1973 the growth rate of world trade has halved, and nobody knows whether this is temporary or permanent. High levels of taxation may diminish initiative, enterprise, and the rate of growth.

This paper deals with the adequacy of natural resource supplies to support an indefinite continuation of high rates of economic growth in advanced industrial economies. This paper is inspired by a recent spate of apocalyptic literature purporting to show that natural resource constraints impose an insuperable obstacle to such growth. The author suggests that this extreme pessimism is unwarranted because it attaches insufficient weight to an impressive array of adaptive mechanisms through which a market economy responds to shifting patterns of resource scarcity. Most important, he argues that technological change is, in the long run, the most powerful mechanism of response. The purpose of the author's recourse to history is to provide some insight into the manner in which economies possessed of a high degree of technological versatility have adapted to changing patterns of resource scarcities. The author notes that arguments drawn from the past history of countries which have demonstrated a high degree of technological innovativeness are not likely to be directly applicable to countries where such skills and talents have been notably lacking. The author believes that history can an insuperable obstacle to such growth.

To discuss the possible contemporary utility of historical studies is, at best, a hazardous venture. And, at most, it can easily become a tedious tramp through a jungle of stale arguments. Economists are accustomed to proceed by generalization, conceptualization, and the explicit construction of theoretical systems embracing and relating a wide variety of experiences; whereas most historians (although there are outstanding exceptions) are traditionally averse to model building, receptive to the idea of the "uniqueness" of events, and hypersensitive to the apparent complexity of particular historical situations. This article focuses on the particular problem (or, perhaps, the pseudoproblem) of whether or not history exemplifies significant patterns or illustrates usable "laws." The article suggests that in general, the answer to the main question is that history is, or can be, very relevant to the contemporary economic scene. And it is argued that this relevance lies less in the provision of timeless examples of socioeconomic processes than in the use of economic history as a source of expectation about such processes. From time to time, no doubt, the direct parallels between past and present will be both clear and significant. Far more often, however, the nature of change will preclude history repeating itself in any useful way. And, as a result, the most that can be expected is that the systematic study of the past will yield an approach to rather than a set of conclusions about the world.

This article focuses on the current relevance of early history of developed countries for economic development and the role of economic history in a professional economist's education. The article argues that the change in the social climate is the one which is most important. True enough, some of the lessons may be negative. But the knowledge of what not to do is most valuable, not less so than the knowledge of what is to be done. It Is indeed hard to acquire the latter without first learning the former. The article asserts strongly that economic history has a role-and an important role-to play in an economist's education. Economic history is, or should be, concerned with-studying, at various times in the past, all the standard economic relationships with which the students will be concerned in their work in economic theory, money and credit, international trade, and the other applied fields. How have these relationships changed over time, and in response to what institutional, demographic, and other forces?