Economic history is replete with episodes of financial crises creating havoc for the real economy. These episodes typically have three important ingredients. First there are large financial flows to finance a bubbling asset class such as sovereigns or housing with 'safe' debt. Second there is a sharp downward movement in the price of the asset that was being financed with debt. Third there is no apparent 'real shock' that one can point a figure at for the large drop in asset prices. In particular there is no major productionside disruption such as the failure of a technology political coup or breakout of large-scale disease. Yet the financial shocks translate into a deep and long economic recession. Why?
Attribution-NonCommercial-NoDerivs 3.0 Chile
Except where otherwise noted, this item's license is described as Attribution-NonCommercial-NoDerivs 3.0 Chile