Premium
FINANCIAL CRISES, OUTPUT LOSSES, AND THE ROLE OF STRUCTURAL REFORMS
Author(s) -
Tola Albi,
Waelti Sébastien
Publication year - 2018
Publication title -
economic inquiry
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 0.823
H-Index - 72
eISSN - 1465-7295
pISSN - 0095-2583
DOI - 10.1111/ecin.12538
Subject(s) - economics , context (archaeology) , emerging markets , financial crisis , toll , macroeconomics , potential output , monetary economics , financial sector development , financial sector , finance , monetary policy , paleontology , genetics , biology
Financial crises take a heavy toll on output growth. We assess the role of structural reforms in reducing the output losses resulting from financial crises across advanced economies, emerging and developing economies, and low‐income developing economies. We also revisit the role of macroeconomic policies in this context. The impact of crises on output growth differs between types of crises and economies, thus warranting sample splits along these lines. Some but not all reforms and policies help to reduce the output losses of crises in the medium term, highlighting the need not to overgeneralize the effectiveness of reforms and policies. Further research is warranted to further explore the heterogeneity in the impact of financial crises on output growth and to better understand when and how specific structural reforms and macroeconomic policies can mitigate the output costs of financial crises. ( JEL E32, E44, E63, G28, O47)