In retrospect what are the major parameters, most frequently causing countries' economy to reduce its size and/or growth.

  1. Global Financial Crisis?
  2. Regional instability?
  3. Local Banking Sector failure?
  4. Long-term inefficient governmental fiscal, civil, law policies, corruption?
  • $\begingroup$ Cross-posted: history.stackexchange.com/questions/21203/… $\endgroup$ Commented Apr 7, 2015 at 9:51
  • $\begingroup$ @ pidosaurus It is on hold and I am following the suggestion of @semaphore. Check last comment under the post. $\endgroup$
    – Ziezi
    Commented Apr 7, 2015 at 10:23
  • $\begingroup$ @pidosaurus Couldn't the question be viewed in both Historical and Economics scope? $\endgroup$
    – Ziezi
    Commented Apr 7, 2015 at 10:25
  • $\begingroup$ Obviously, I just mention it in a non-judgemental way. :) $\endgroup$ Commented Apr 7, 2015 at 11:08
  • 1
    $\begingroup$ @pidosaurus My apologies if my response seemed judgemental :) $\endgroup$
    – Ziezi
    Commented Apr 7, 2015 at 11:24

1 Answer 1


Interestingly, Romer and Romer (2014) show that financial crises are typically not causing major downfalls in economic activity, if you restrict your sample onto the developed countries post WWII.

An advantage of their method is that they look at a real time narrative, so they don't try to judge ex-post what was a crises. So historians winner writes history criticism doesn't apply here.

It is certainly worse if the financial crises is global, but that's pretty infrequent.

  • $\begingroup$ Indeed a nice research, I am just reading it now. Note that it covers the period 1967-2007, leaving the recent most significant global crisis outside of the research scope. $\endgroup$
    – Ziezi
    Commented Apr 7, 2015 at 11:32
  • $\begingroup$ @simplicisveritatis Sure, thats why I said typically. If they typically don't, but did this time, there must be something specific to this time, such as size and/or correlation among countries. But since you were into frequent causes - we don't have frequent large size financial crises. $\endgroup$
    – FooBar
    Commented Apr 7, 2015 at 12:11
  • $\begingroup$ I accept and appreciate your answer, (I would up voted it as it covers 90% of the first point) just made a comment, rather than critique . Regarding the frequency, we surely don't have great amount of large financial crises, however, we have 196 countries which provides us with enough data to establish a relationship between any of the 4 points in the OP and the country-specific economic state. $\endgroup$
    – Ziezi
    Commented Apr 7, 2015 at 12:36

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