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This paper compares from a political economy perspective the financial crisis that broke out in Japan after 1991 and in the US during 2007-2009. Common features of both crises are the initial deregulation in the financial sector and the burst of the consequent asset price bubble. The institutional structure shaped by government interventions in Japan was unable to overcome the crisis and the subsequent long recession while the US government responded relatively quickly to the crisis. This paper comparatively evaluates the causes of the crises from the political economy perspective. [ABSTRACT FROM AUTHOR]

Many theoretical and empirical researches have been written on the issue of crises often experienced by developing countries since the early 1990s. Moreover, the 2007 crisis started in the US has taken its place as a global crisis in the literature because of the most spreading crisis over the World since the 1929 Great Depression, and also experienced by a developed and powerful country. Crises have been predicted by advanced early warning systems according to movements in some macroeconomic variables. Unfortunately, that financial crisis mostly attached to speculative activities has complicated its prediction. In this paper, the relationship of twin deficits with crisis for the US and Turkey is analyzed by cointegration and granger causality tests along with computed speculative pressure index, in shed of the 2008 Global Crisis. Finally, it has been reached to uncertain results for Tukey while twin deficits is certainly effective for the US economy. [ABSTRACT FROM AUTHOR]