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Romania In A Post-Credit Crunch World? A Cautionary Tale From Australia And America

Author

Listed:
  • Costea, Carmen

    (AES Bucharest, Romania)

  • Keen, Steve

    (University of Western Sydney, Australia)

Abstract

We present data on debt accumulation in Australia and the United States, and tentative data on Romania, to pose the question of whether Romania might experience a credit crunch as a result of the US subprime financial crisis. We develop a model of a credit crunch in a pure credit economy with endogenous money creation to show how changes in bank lending practices and borrower repayment behaviour can bring about an economic decline.

Suggested Citation

  • Costea, Carmen & Keen, Steve, 2009. "Romania In A Post-Credit Crunch World? A Cautionary Tale From Australia And America," Journal for Economic Forecasting, Institute for Economic Forecasting, vol. 6(1), pages 16-35, March.
    • Handle: RePEc:rjr:romjef:v:6:y:2009:i:1:p:16-35
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    File URL: http://www.ipe.ro/rjef/rjef1_09/rjef1_09_2.pdf
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    References listed on IDEAS

    as
    1. Steve Keen, 1995. "Finance and Economic Breakdown: Modeling Minsky’s “Financial Instability Hypothesis”," Journal of Post Keynesian Economics, Taylor & Francis Journals, vol. 17(4), pages 607-635, July.
    2. Graziani,Augusto, 2003. "The Monetary Theory of Production," Cambridge Books, Cambridge University Press, number 9780521812115, November.
    3. Chay Fisher & Christopher Kent, 1999. "Two Depressions, One Banking Collapse," RBA Research Discussion Papers rdp1999-06, Reserve Bank of Australia.
    Full references (including those not matched with items on IDEAS)

    Citations

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    Cited by:

    1. Alenka Kavkler & Mejra Festić, 2010. "The Trade Deficit and Banking Sector Results in Romania and Bulgaria," The AMFITEATRU ECONOMIC journal, Academy of Economic Studies - Bucharest, Romania, vol. 12(27), pages 199-213, February.

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    More about this item

    Keywords

    Macroeconomics; Monetary Policy; Debt Deflation; Financial Instability;
    All these keywords.

    JEL classification:

    • E12 - Macroeconomics and Monetary Economics - - General Aggregative Models - - - Keynes; Keynesian; Post-Keynesian; Modern Monetary Theory
    • E21 - Macroeconomics and Monetary Economics - - Consumption, Saving, Production, Employment, and Investment - - - Consumption; Saving; Wealth
    • E31 - Macroeconomics and Monetary Economics - - Prices, Business Fluctuations, and Cycles - - - Price Level; Inflation; Deflation
    • E44 - Macroeconomics and Monetary Economics - - Money and Interest Rates - - - Financial Markets and the Macroeconomy
    • E51 - Macroeconomics and Monetary Economics - - Monetary Policy, Central Banking, and the Supply of Money and Credit - - - Money Supply; Credit; Money Multipliers
    • E52 - Macroeconomics and Monetary Economics - - Monetary Policy, Central Banking, and the Supply of Money and Credit - - - Monetary Policy
    • E63 - Macroeconomics and Monetary Economics - - Macroeconomic Policy, Macroeconomic Aspects of Public Finance, and General Outlook - - - Comparative or Joint Analysis of Fiscal and Monetary Policy; Stabilization; Treasury Policy
    • E66 - Macroeconomics and Monetary Economics - - Macroeconomic Policy, Macroeconomic Aspects of Public Finance, and General Outlook - - - General Outlook and Conditions

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