Reinhart + Rogoff – Aftermath

Wow…emerging and developed economies share common features following a banking crisis:

  1. Asset market collapses: real housing pricing decline 35% over six years; equity price collapses average 55% over three and a half years
  2. Profound declines in output and employment: unemployment goes up 7% on average over four years; and output falls (from peak to trough) an average of 9% over two years.
  3. Real value of government debt explodes: up an average of 86% in major post WW-II episodes. This is typicall associated with a collapse in tax revenues.
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