Literature Survey on Financial Stress, Recessions and How Finance affects Real Economy

IMF in its June 09 research bulletin has brief literature survey on all these 3 issues.

 Selim Elekdag reviews financial stressThe financial turmoil that started in the summer of 2007 mutated into a full-blown global crisis. The world economy has experienced a major downturn associated with one of the most severe episodes of financial stress witnessed in decades. While an episode of financial stress encompasses turbulent periods—such as the recent crisis—it also includes related events that only result in asset price corrections, which on occasion may be linked to banking distress. This article briefly surveys recent IMF research related to financial stress across both advanced and emerging economies.

 

Hui Tong reviews financial market linkages with real economyThe 2007–08 financial crisis began with problems in the subprime mortgage market in the United States but quickly turned into a global financial crisis. The crisis resulted in a wide range of adverse effects on the real economy, as nonfi nancial firms around the world appeared to spiral downward. A key potential contributor to the plight of the nonfinancial firms was the fi nancial crisis itself in the form of a negative shock to the supply of their external financing needs. This article briefly surveys recent IMF research on the real effects of the crisis.

 

Finally there is an interview of Marocs Terrones who reviews historical analysis of recessions in a Q&A format.

 Good insights.