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The Great Recession: Lessons from Japan and the Great

Depression

Bachelor’s Thesis

Wietse van Diepen, 6115926 Thesis supervisor: Lukáš Tóth Date: August 2013

University of Amsterdam

Faculty of Economics and Business BSc Economics and Business Specialization: Economics

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Abstract

This paper looks at two crises in the past, the Great Depression and the crisis in Japan in the 1990s, and compares this with the current crisis, the Great Recession. These crises have two important similarities, the credit expansion before each crisis and the banking crisis during the crisis. The policymakers have made wrong decisions in each crisis. During the Great Depression they intervened to little and during the Japanese crisis, the QE policy and the stimulation of the government had not very much effect on, for example, the economic growth. So, during the current crisis, it is good to know that these policies didn’t work very efficient. The only possible solution is to write down a part of the debt worldwide.

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Table of contents

Abstract ... 2

1. Introduction ... 4

2. Credit expansion before a crisis ... 4

2.1 Credit expansion before the Great Depression in the US (1930s) ... 4

2.2 Credit expansion before the crisis in Japan (1990s) ... 6

2.3 Credit expansion before the Great Recession (2008-2009) ... 7

3. Banking crisis ... 9

3.1 Banking crisis during the Great Depression ... 10

3.2 Banking crisis during the Japanese crisis ... 11

3.3 Banking crisis during the Great Recession ... 13

4. Possible scenarios ... 15

4.1 Controlled debt reduction ... 16

4.2 Uncontrolled collapse of the economy ... 16

4.3 Continue with the same policy ... 17

5. Conclusion ... 20

6. References ... 21

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1. Introduction

In this paper I will compare the two major crises of the past with the current crisis. The two crises I use are the Great Depression, which took place from 1929 to 1933, and the Japanese crisis in the 1990s. Inspired by the work of Minsky, including the ‘Financial Instability Hypothesis’, I have chosen for these two crises to compare with the current crisis. Minsky has written about economic booms which arise before a crisis. This boom is caused by a large credit expansion. After this boom follows a bust, including a decrease of asset prices. As a result, a crisis can occur. Because the banks facilitated this credit expansion, there arose a banking crisis when the borrowers were not able to repay their debt (Minsky, 1992). There was a economic boom followed by a crisis in time of the Great

Depression, the Japanese crisis and the current crisis (Great Recession). By comparing these crises, I will try to find out which measures are good and which measures are bad in the attempt to solve a crisis.

2. Credit expansion before a crisis

The first remarkable similarity between the three crises, is the large credit expansion before each crisis. In section 2.1 I will describe the large credit expansion before the Great Depression in the US. I have chosen the US, because the crisis was very intense and started in that country. In the 1920s, which are later called the Roaring Twenties, the large credit expansion occurred. Section 2.2 will tell about the large credit expansion before the Japanese crisis. The expansion took place in the 1980s. In the final section, the large credit expansion before the Great Recession will be described. This

expansion took place from mid-90s to the beginning of the crisis in 2007.

2.1 Credit expansion before the Great Depression in the US (1930s)

The Great Depression occurred in the period from 1929 to 1933. However, the causes of this crisis were laid many years before. In the 1920s there was a great credit expansion. This period of credit expansion began around July 1921 and ended around 1929, when the production began to decline. The total money supply rose from 45,3 billion dollar in July 1921 to 73,26 billion dollar in June 1929. This is an increase of 61,8 percent in 8 years, an annual average of 7,7 percent.

The question is where that big annual increase of the total money supply came from? Rothbard (1963) says there are three possible ways: a) a decrease of the required reserves, b) an increase of

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the total reserves, and c) spending of the excess reserves. Because it is well known that banks did not have any excess reserves in the 1920s, the latter possibility can be excluded. The reserve

requirements were fixed in the 1920s, these were 13 percent for the Central Reserve City Banks, 10 percent for the Reserve City banks and 7 percent for the Country Banks. For time deposits the required reserve ratio was at 3 percent. Despite that the reserve requirements were fixed, this was one of the causes of the credit expansion. There was a shift from demand deposits to time deposits. The reserve requirements of demand deposits were 13, 10 and 7, depending on what kind of bank you had. The time deposits had a reserve requirement of 3 percent, regardless of what kind of bank. Demand deposits increased by 30,8 percent from 1921 to 1929, but time deposits increased by 72,3 percent in the same period. With a lower reserve requirement, the banks have to keep less money in reserve, so it can lend more money. As a result, the money supply increases. Therefore, this is one of the causes of the rising credit expansion.

The most important cause of the increase of the total money supply is not the shift from demand deposits to time deposits, but the increase of the total bank reserves. These reserves increased from 1,6 billion dollar in 1921 to 2,36 billion dollar in 1929. Because of the fractional banking system, the total money supply increased from 18,6 billion dollar in 1921 to 29,4 billion dollar in 1929. There are different causes why the bank reserves can change. A part of that cause is controlled by the Federal Reserve and a part is uncontrolled. Between 1921 and 1929, the uncontrolled reserves decreased by 1,04 billion dollar and the controlled reserves increased by 1,79 billion dollar. Concluding, the Federal Reserve was primarily responsible for the increase in the total money supply in the 1920s.

During the boom in the 1920s, the Federal Reserve stimulated the credit expansion, but in the beginning of the crisis in October 1929, the Federal Reserve continued this policy. They added 300 million to the reserve of the banks, doubled its government securities with 150 million dollar and it discounted about 200 million dollar more for member banks. By using this measures the credit expansion rose by 1,8 billion dollar in just 1 week. This is a increase of 10 percent of the total money supply.

Although the attempts of the Fed to increase the total money supply, in 1931 it began to decrease. It decreased from 73,2 billion dollar to 68,2 billion dollar. The controlled reserves still increased by 195 million dollar, but the uncontrolled reserves decreased by 305 million dollar. This occurred primarily because people withdrew their money from their bank account and held it in cash. Many people had no confidence in the banking system anymore because of the crisis. Not only the Fed and the

government tried to increase the bank reserves, but they also declined the interest rate. In 1930, the

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New York Fed declined the rediscount rates from 4 to 2 percent, in the end they declined the interest rates to 1 percent (Rothbard, 1963, pp. 261 - 262).

Eichengreen and Mitchener (2003) concluded that there was a real estate boom in 1925 and a Wall Street boom in 1928/1929. These were caused by a large credit expansion. This credit expansion did not create inflation in the US, because there were fixed exchange rates of the gold standard.

However, this expansion did caused inflation in the rest of the world. Figure 1 shows that the private debt rose very fast between 1913 and 1929. Except France and Germany, all countries had a increase of the ratio of private credit of GDP.

Figure 1

2.2 Credit expansion before the crisis in Japan (1990s)

Okina et al. (2001) concluded that Japan had a bubble economy in the 1980s. Which means that the asset prices rose very fast, an overheated economy and the total money supply increased very fast. The asset prices began to rise around 1982 and rose faster around 1985-1986. However, in 1985 en 1986, there was a recession. This was caused by an increasing yen with reference to other currency, whereby the exports declined. Therefore they said the real bubble economy started in 1987. In 1987, the economy grew very fast, the total money supply increased quickly and also the asset prices increased quicker than before the recession.

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In order to solve the crisis, the Bank of Japan (BOJ) began to decrease the official discount rate. This discount rate decreased from 5 percent to 2,5 percent in 5 steps between January 1986 and February 1987. Because of the interest decrease, the extension of loans was stimulated. There was also some risk, as a too fast increase of asset prices. When the asset prices and the total money supply began to increase faster after the third and fourth increase of interest , the BOJ was worried about that. In February 1987, the BOJ announced to increase the interest rate as soon as possible. In May 1989, they increased the interest rate up to 6 percent. It took several years before the increased interest rate had a visible effect on the asset prices and the money supply.

Figure 2 shows that the annual increase of the total money supply is between 7 and 13 percent during the 1980s. This was partly caused by the expansionary monetary policy (Okina et al., 2001).

Figure 2

The question is why they didn’t pursue a more thight monetary policy to avoid a bubble economy. Okina et al. (2001) say in their paper, one of the reasons is that there was no inflationary pressure, and therefore there was no necessity to increase the interest rates.

2.3 Credit expansion before the Great Recession (2008-2009)

The crisis, which began in 2007-2008, is also known as the Great Recession. Before the start of the crisis, there was a huge credit expansion. The total money supply increased very fast. This occurred also before the crises in the 1930s and in Japan in the 1990s. Figures 3 and 4 show that. Figure 3 shows the annual growth of the total money supply in the US. Since the mid-90s the total money supply increased by more than 5 percent, with outliers of 12 percent. Figure 4 shows the annual

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growth of the money supply in the euro zone. Also in the euro zone there is a huge credit expansion, with a minimal money growth of 4 percent with outliers of 12 percent.

Figure 3

Figure 4

The crisis, which began in 2007-2008, is a worldwide crisis. One of the reasons for that fact is that many countries in the world are economically interdependent and the economies are deeply interlocked. After the economic slowdown in 2001, the world economy recovered very quick and it shows record percentages of economic growth. This development went hand in hand with a strong

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growth of the financial sector, which resulted in a large increase in asset prices. Increasing real estate prices played a import role by the credit growth. By increasing prices, buyers had to borrow more money to buy real estate.

Figure 5 shows the increase of the debt levels (household debt, corporate debt and government debt) in some countries (Roxburgh et al., 2010).

Figure 5

3. Banking crisis

A second similarity between the crises is the banking crisis. What are the causes of these banking crises and what measures had to be taken to solve this? In section 3.1, I will describe and analyze the banking crisis of the Great Depression, in section 3.2, the banking crisis during the Japanese crisis and in section 3.3, the banking crisis of the Great Recession.

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3.1 Banking crisis during the Great Depression

The Great Depression in the 1930s is known as the most severe crisis in the industrialized world. Between 1930 and 1933, the economies of many developed countries have negative economic growth. As seen in figure 6.

Figure 6

Source: Maddison (2009).

In this figure, one can see that three quarter of the countries had a negative economic growth between 1930 and 1933.

During the Great Depression, there was also a banking crisis in many countries. In many analysis the banking crisis plays an important role as one of the causes of the Great Depression. For example, Bernanke and James (1991) have concluded that countries with a banking crisis had a economy with a bigger economic downturn than countries without a banking crisis. It is still unclear how exactly the banking crisis has harmed the economy in the US.

The banking crisis looks like the boom-bust theory of, among others, Fisher (1932, 1933), Minsky (1982) aand Kindleberger (1978). This theory describes that first there was a high economic growth, that was partly caused by having much debt. By very high debt levels, the banking sector is

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vulnerable to negative economic growth shocks. By this shocks, the banks got into trouble. This theory can be applied on the Great Depression. In Europe was an investment boom after the First Worldwar, which finally ended in a banking crisis during the Great Depression. In America was the Roaring Twenties investment boom, which finally ended in a banking crisis during the Great Depression.

3.2 Banking crisis during the Japanese crisis

The Japanese crisis in the 1990s consisted three phases. In this paragraph I will summarize these 3 phases using the work of Hoshi and Kashyap (2008).

Phase 1 (1991 – 1997)

The first phase of the economic and financial crisis in Japan began with decreasing asset prices in the early 1990s. Japanese banks were highly exposed to Japanese real estate, because they had a huge position in this market. So when the real estate prices would decrease, they made big losses. The Japanese banks lent much money to the jusen. The jusen are financial institutions who operate in the home mortgage market. The prices of real estate rose very fast in the early 1980s, so it was very attractive to began lending in other markets. That is why the Japanese banks were highly exposed to Japanese real estate. When the prices began to decline in the early 1990s, the jusen were the first financial institutions with problems. In 1991, the total amount of non-performing loans of the jusen had increased to 4,6 trillion yen, or 38% of their total outstanding loans. The Bank of Japan made a rescue plan for the jusen to save this institutions. That plan included interest rate reductions by the founder banks. This plan failed and as a result the interest went to zero. This plan could work, only if the economy will recover and the real estate prices will rise with 25% the next ten years. However, this didn’t occur and several institutions have taken their losses, including the government. Not only the jusen had problems, but also the other banks. The problems of the jusen were relatively small in comparison with the problems of other banks. The policy of the Ministry of Finance was that healthy banks absorb the failing banks. The failing banks were the banks which had problems

through decreasing real estate prices. To keep confidence in the banks, the deposits were guaranteed by the government till 10 million yen. This prevented a bank run on Japanese banks. In March 1993, the Ministry of Finance forced the banks to tell the public which amount of non-performing loans they had on the balance sheet. Before March 1993, they didn’t disclose any

number about the amount of non-performing loans. The definition of non-performing loans was very

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narrow. The definition only includes loans of failing companies and loans on which payments were suspended for more than six months. The Japanese supervisors accepted this, because they hoped that the banks could work off the non-performing loans when the economy would recover. However, the economy didn’t recover and the percentage of non-performing loans continued to increase. Hereby a little small banks went bankrupt.

Phase 2 (1997 – 1999)

The second phase of the Japanese crisis was characterized by a couple of bankruptcies of (huge) banks. Therefore the Eurobank Tokyo Interbank Borrowing Rate (TIBOR) increased. The banks were extremely careful to lent money to each other. As a result, for some banks it was very hard to get money to finance their business. In December 1997, the government decided to use taxpayers’ money to solve the financial crisis. 10 trillion yen from public funds went to the banking sector. A second measure of the government was to change the accounting rules. Banks were allowed to choose between market or book values for their assets. In this way the balance sheets of the banks looks better than it was in reality.

On Februari 16, 1998, there passed a law, the Financial Function Stabilization Act, which allowed the government to use 30 trillion yen of public funds to solve the financial crisis. 17 trillion yen for depositors of bankrupting banks and 13 trillion for recapitalizing other banks.

Phase 3 (1999 – 2003)

In 1999, they started a second round of recapitalization. Through this recapitalization the markets calmed down. The ‘Japan premium’, the difference between the interbank loans of Japanese banks and European and American banks, began to decline to normal levels. The lending to companies and households started to flow. However, the problem of non-performing loans still exist and the capital shortages re-emerged. In March 2002, the Japanese banks collectively had a core capital of 30,2 trillion yen. This core capital consisted 10,6 trillion yen of deferred tax assets. These are tax

deductions coming from loan losses that the banks would be able to claim in the future if they make some profit. However, there is a condition, this profit had to realize within five years. If not, then the deferred tax assets would expire. Fukao (2003) has said that they estimate the capital reserves too high. He has concluded that the bank reserves were 6,8 trillion yen too low.

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Finally, the government has changed his policy. In April 2003, they established the Industrial Revitalization Corporation of Japan to buy non-performing loans from non-main banks and to cooperate with the banks to restore their health. Since 2003, the amount of non-performing loans started to decline slowly. Also the amount of bad loans on the bank balance sheets started to decline from 2003 till 2005 by government policy. The banks started to rebuild their capital. On the one hand the retained earnings became higher, on the other hand the capital gains on the stock portfolio became higher.

3.3 Banking crisis during the Great Recession

During the Great Recession, there was also a banking crisis. It became a worldwide banking crisis, because, among other reasons, the securitization of mortgages. Countries like Japan and Germany, but also emerging markets as China, would like to buy this mortgage packages. When these packages became less worth than they primarily thought, many banks worldwide got into trouble. Diamond and Rajan (2009) explained the causes of the banking crisis. The causes of the banking crisis, especially the subprime mortgage market crisis in the US, was set in the 1990s. As a result of the several crises in the 1990s, like the East Asian crisis, the Russian bankruptcy and the IT bubble burst in the 2000s, the monetary policy was expansionary. Therefore, the Fed decreases the interest rates to stimulate the economy. This ensured that it also became easier to borrow money for buying a house. As a result, the house prices started to increase and there arose a bubble. Among others, the financial innovation made it easier to marginal-credit-quality buyers to buy a house with borrowed money. The mortgages provided to these marginal-credit-quality buyers were packed in packages. This is called securitization. These packages were sold to investors around the whole world. These investors, namely, looked for investment opportunities. These packages got often the highest ratings from rating agencies, whereby it looked like a safe investment. They thought the house prices would still increase, so you can always sell your house with profit. In this way there was little risk for the provider of the mortgage. Until the house prices started to decrease. Then the mortgage packages were not so safe as they thought.

Not only the US had a real estate bubble, as you can see in figure 8. This figure shows that there were many countries with an explosive increase of the house prices. These countries were vulnerable to a large decrease of the house prices (Reinhart and Rogoff, 2008).

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Figure 7

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Gasperini and van Rixtel (2013) finds that the in the US originated banking crisis, could expand around the world because the interconnections between the banks worldwide. First the highly leveraged banks, especially investment banks, got into trouble when the subprime mortgage market bubble burst. As a result of the interconnections between banks worldwide, the interbank spreads started to increase. Also, the share prices declined worldwide. Figure 9 shows that. Banks could hardly get funds, so the central banks decided to provide unlimited funds. Governments intervened also with capital injections and higher deposits insurance ceilings.

Figure 8

4. Possible scenarios

There are three scenarios for this crisis. The first scenario is debt reduction. By reduction of expenditures or by stimulating the economic growth, then you can reduce your debt-to-GDP ratio. The second scenario is a uncontrolled collapse of the economy. This includes many bankruptcies. The third scenario is to continue the policy that we had the last 5 years, therefore creating more debts. I shall discuss each scenario in the next paragraphs.

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4.1 Controlled debt reduction

Koo (2011) concludes the Western economies has a balance sheet recession. First, there arises an asset price bubble, then the prices will decline and finally the private sector will repay a part of their debt. These asset price bubbles have been almost always financed with debt. When these prices decline, the worth of the assets become less than the debt, which it is financed. To repair their balance sheet, corporations and households repay a part of their debt. However, the repayments of debt ensured that there was a decrease in consumption and investment. Therefore there arises a recession. There arose a gap between a normal level of consumption and investment and the actual level of consumption and investment, and the government has to spend more to compensate that. To ‘repair’ the balance sheet of corporations and households can take while, even more than 10 years. For example Japan, it started to repair the balance sheet in the 1990s, after the burst of the asset price bubble, and it still occurs at the moment. During that period the government has to compensate the debt repayments of the private sector. That explains the national debt of Japan in 2005, it was more than 200 percent of GDP.

During the Great Depression the government didn’t compensate the debt repayments of the private sector. As a result, the total money supply declined with 30 percent between 1929 and 1933. The GDP declined with 46 percent during this period.

It is impossible to repay the debt and to avoid a deflationary spiral. Koo (2011) said the debt-deflationary spiral created a depression in the 1930’s. It is possible to repay the debt of the private sector, but then the government has to compensate that en has to borrow more money. So the amount of extra repayment of the private sector is the amount which the government borrowed extra.

4.2 Uncontrolled collapse of the economy

To have a free market during a crisis is dangerous. Fisher (1933) describes the consequences of a free market during a crisis. It is possible to have debt deflation. Fisher says there arise a chain of

consequences that repeats, the debt-deflationary spiral. I quote: 1. Debt liquidation leads to distress selling and to

2. Contraction of deposit currency, as bank loans are paid off, and to a slowing down of velocity of circulation. This contraction of deposits and of their velocity, precipitated by distress selling, causes

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3. A fall in the level of prices, in other words, a swelling of the dollar. Assuming, as above stated, that this fall of prices is not interfered with by reflation or otherwise, there must be

4. A still greater fall in the net worths of business, precipitating bankruptcies and

5. A like fall in profits, which in a "capitalistic," that is, a private-profit society, leads the concerns which are running at a loss to make

6. A reduction in output, in trade and in employment of labor. These losses, bankruptcies and unemployment, lead to

7. pessimism and loss of confidence, which in turn lead to

8. Hoarding and slowing down still more the velocity of circulation.

If the government and the central banks don’t intervene, a depression arise with many bankruptcies, economic contraction and large unemployment. Since banks have a large leverage, banks will go bankrupt when too many borrowers don’t repay their debt. The Tier 1 ratio, the ratio which shows the core capital as a percentage of the outstanding commitments, of the US banks was 9,7 percent in 2006 (Fahlenbrach and Stulz, 2009). So when the banks write down 10 percent of the outstanding debts, they are bankruptcy, unless they are rescued by the government or the central bank.

4.3 Continue with the same policy

The final scenario is continue to increase the total amount of debt. To stimulate the economy the central banks started with quantative easing (QE). The Federal Reserve started to buy long-term government securities and other securities. Not only the Fed started with QE. Also other banks enhanced their balance sheets, but they called it not always quantative easing. However, QE is not widely used in recent history, so it is difficult to estimate the benefits and the risks (Allen and Carletti, 2010).

Although QE is not used many times, there is one exception: Japan. After the economic boom in the 1980s, the asset price bubble burst in the early 90s. Since the bubble has burst Japan has a couple of deep recession interspersed with short recoveries. Between 1991 and 2002 the average annual economic growth was 1 percent (Oda and Ueda, 2007). To stimulate the economy the Bank of Japan (BOJ) decreases the interest rate to 0 percent. Figure 8 shows that. At the same time the BOJ

enhanced the monetary base. The effect on the economy was not very large, because the total money supply didn’t increase (see figure 9 iii). The reason was that banks didn’t lend the money to

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the private sector, and the money multiplier decreased rapidly. The banks reduced their debt positions rather than lend money to the private sector. To avoid deflation the BOJ decreased the interest rate and enhanced the monetary base, because deflation has a negative effect on the economy (see figure 9 i).

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Figure 9

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5. Conclusion

I have looked at three crises of the past 100 years. They have a common characteristic, before each crisis was a large credit expansion and during this expansion there arose a asset price bubble. When that bubble burst the banks got into trouble. Koo (2011) concludes it is impossible to declined the total amount of debt. When the private sector declined its total amount of debt, the government has to increase its total amount of debt. In this way the total amount of debt in the economy doesn’t decline.

Not intervene at all during a crisis is not a good solution either. Fisher (1933) described that solution and concluded that there will arise a debt-deflationary spiral. Koo (2011) concluded that also. During the Great Depression such a spiral arose, and as a result a depression. To avoid a depression, Japan decided to intervene, after the asset price bubble burst in the 1980s. The Japanese government and the central bank started to stimulate the economy. As a result of this policy the monetary base tripled from 1990 to 2004 and the national debt increased to more than 200 percent of GDP in 2005. Although the stimulation, the economic growth was a poor 1 percent a year from 1991 to 2002. Overall, you can conclude that the measures during this crisis haven’t produce the results as they would wish. This results including a decrease of the total amount of debt and a high economic growth. A rapid increase of the total amount of debt was one of the reasons why the asset price bubble arose.

It is impossible to repay the debt to banks in this way because the deflationary-debt spiral and it is not desirable to increase the total amount of debt. The only solution is to write down a part of the debt. Massively and worldwide. As a result the society will be free of a large amount of debt and there will be space for sufficient economic growth. A debt write down will cost a lot of welfare, but a depression cost also a lot of welfare, I think even more, as you can see during the Great Depression. When you write down debt of the balance sheet, you have to write down assets, like savings and pensions. This means a decrease of the welfare, but with good prospects. How much debt have to write down and which kind of debt is a question for other research papers.

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6. References

Allen, F. and Carletti, E. (2010). An overview of the crisis: causes, consequences and solutions, International Review of Finance, no. 10:1, pp. 1-26.

Bernanke, B. S. and James, H. (1991). The gold standard, deflation, and financial crisis in the Great Depression: An international comparison, Financial Markets and Financial Crisis, Chicago, IL, University of Chicago Press.

Diamond, Douglas W. and Rajan, R. (2009). The credit crisis: conjectures about causes and remedies, NBER Working Paper, No. 14739.

Eichengreen, B and Mitchener, K. (2003). The Great Depression as a credit boom gone wrong, BIS Working Paper, No. 137.

Fahlenbrach, R. and Stulz, R. (2009). Bank CEO Incentives and the Credit Crisis, National Centre of Competence in Research Financial Valuation and Risk Managemen, Working paper, no. 603. Fisher, I. (1932). Booms and Depressions: Some First Principles, New York, Adelphi. — (1933). The Debt-Deflation Theory of Great Depressions, Econometrica, 1, 337–57.

Fukao, Mitsuhiro (2003). Financial sector profitability and double, Chicago: University of Chicago Press, pp. 9-35.

Gasperini, G. and Van Rixtel, A. (2013). Financial crisis and bank funding: recent experience in the euro area, BIS Working Paper, no. 406.

Hoshi, Takeo and Kashyap, Anil K. (2008). Will the U.S. bank recapitalization succeed? Eight lessons from Japan, NBER Working Paper, No. 14401.

Kindleberger, C. P. (1978), Manias, Panics, and Crashes: A History of Financial Crises, New York, Basic Books.

Koo, R. C. (2011). The world in balance sheet recession: causes, cure and politics. Real-world economics review, no. 58.

Maddison, A. (2009). ‘Statistics on World Population, GDP and Per Capita GDP, 1–2006 AD’, available at http://www.ggdc.net/maddison/Historical_Statistics/vertical-file_03-2009.xls, accessed 9

February.

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Minsky, H. (1982). Can “It” Happen Again? Essays on Instability and Finance, Armonk, NY,M. E. Sharpe.

Minsky, H. (1992). The financial instability hypothesis, The Jerome Levy Economics Institute of Bard College, Working paper, no. 74.

Oda, N. and Ueda, K. (2007). The effects of the Bank of Japan’s zero interest rate commitment and quantitative monetary easing on the yield curve: a macro-finance approach, The Japanese economic review, vol. 58, no. 3, pp. 303-328.

Okina, K., Shirakawa, M. and Shiratsuka S. (2001). The Asset Price Bubble and Monetary Policy: Japan’s Experience in the Late 1980s and the Lessons, Monetary and economic studies

Reinhart, C. and Rogoff, K. (2008). Banking crisis: an equal opportunity menace, NBER Working Paper, no. 14587.

Rothbard, M.N. (1963). America’s Great Depression, Ludwig von Mises Institute

Roxburgh, C et al. (2010). Debt and deleveraging: The global credit bubble and its economic consequences, McKinsey Global Institute.

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