TY  - JOUR
AU  - Gourinchas,Pierre-Olivier
AU  - Valdes,Rodrigo
AU  - Landerretche,Oscar
TI  - Lending Booms: Latin America and the World
JF  - National Bureau of Economic Research Working Paper Series
VL  - No. 8249
PY  - 2001
Y2  - April 2001
UR  - http://www.nber.org/papers/w8249
L1  - http://www.nber.org/papers/w8249.pdf
N1  - Author contact info:
Pierre-Olivier Gourinchas
Department of Economics
University of California, Berkeley
530 Evans Hall #3880
Berkeley, CA 94720-3880
Tel: 510/643-0720
Fax: 510/642-6615
E-Mail: pog@econ.berkeley.edu

Rodrigo Valdes
E-Mail: rvaldes.email@gmail.com

Oscar Landerretche
540 Memorial Drive
Apt 801
Cambridge, MA 02139
Tel: 617/577-5560
E-Mail: peque@MIT.EDU
AB  - Recent theories of crisis put lending booms at the root of financial collapses.  Yet lending booms may be a natural consequence of economic development and fluctuations.  So are lending booms dangerous?  In this paper, we investigate empirically this question using a broad sample of lending boom episodes over 40 years, with a special eye for Latin America. Our results indicate that (1) lending booms are often associated with (i) a domestic investment boom; (ii) an increase in domestic interest rates; (iii) a worsening of the current account; (iv) a declines in reserves; (v) a real appreciation; (vi) a decline in output growth, (2) 'typical' lending booms do not increase substantially the vulnerability of the banking sector or the balance of payments.  Comparing Latin America and the rest of the world, we find that Latin America lending booms make the economy considerably more volatile and vulnerable to financial and balance of payment crisis.
ER  -