Understanding Global Crises

Understanding Global Crises

An Emerging Paradigm

By Assaf Razin

A historical and theoretical investigation of the “common storylines” of recent financial crises.





A historical and theoretical investigation of the “common storylines” of recent financial crises.

Financial crises have some common storylines, among them bursting asset bubbles, bank failures, sharp tightening of credit, and downturn in trade. They are also different from one another. Some start with sudden reversal of international capital flows, others with domestic credit implosions. A challenge to economic research is to integrate common as well as disparate threads into a coherent analytical framework that is at the same time empirically testable. In Understanding Global Crises, Assaf Razin offers a review of an emerging paradigm that is consistent with the key features of recent global financial crises. This paradigm presents in a transparent way basic analytical elements of the theories of financial and monetary crises and how these elements fit together in macroeconomic analysis of global crises.

Razin surveys the credit implosion that led to a severe banking crisis in Japan in the 1990s, the Asian financial crisis that began in 1997, the global meltdown of 2008, and the Euro-zone crisis. He reviews the analytics of financial fragilities, credit frictions, currency crises, and balance of payments crises, and addresses international capital flows with information frictions. He then presents key developments in the New Keynesian analytical framework by examining the surge of re-modeling efforts aimed at the development of an analytical framework to underpin monetary and fiscal policy in the post-2008 economic era.


$50.00 X ISBN: 9780262028592 256 pp. | 6 in x 9 in 23 figures, 5 tables


  • Assaf Razin provides here the definitive introduction and overview of the historical and analytical literatures on financial crises. Students new to the subject and specialists alike will appreciate the crystal clear exposition. Razin's book is the obvious starting point for all those concerned to understand risks to financial stability. And, given recent events, 'all those concerned' is likely to connote a very large number.

    Barry Eichengreen

    George C. Pardee and Helen N. Pardee Professor of Economics and Political Science, University of California, Berkeley

  • The global financial crisis shook the foundations of macroeconomic theory: what had we missed? In this book, Professor Razin opens an illuminating door on the post-crisis world and painstakingly builds the foundations of a post-crisis paradigm. A must-read for anybody who wants to go beyond the stylized facts and begin to understand the why and how of global financial crises.

    Carlos A. Vegh

    Fred H. Sanderson Professor of International Economics, Johns Hopkins University

  • Assaf Razin has performed a real tour de force: blending historical study with rigorous theoretical analysis; presenting a vast and penetrating overview of the literature on financial crises; developing a new macroeconomic paradigm in which financial intermediaries play a major role, and in which asset and debt accumulation matters. All in one book. Thanks to Assaf Razin's book, doing macroeconomics is interesting again.

    Paul De Grauwe

    John Paulson Chair in European Political Economy, London School of Economics and Political Science

  • Understanding Global Crises is an impressive book. The thoughtful and accessible analysis of the financial crises in the last 25 years in the first chapters will be extremely useful for the layperson interested in crises. The elegant modeling of the financial frictions predating these crises in the last chapters will also attract the expert. A must-read!

    Graciela L. Kaminsky

    Professor of Economics and International Affairs, George Washington University