Dominique Plihon

Consumer debt and financial fragility

This article sheds light on a crucial aspect of the global crisis of 2007–2009: the steady increase of US consumer debt to precipitous levels over a quarter of century. That trend, fed by a combination of macro‐economic, demographic, and political factors, intensified greatly in the 2000s when a series of financial innovations allowed American households to draw equity out of their homes while at the same time feeding an unprecedented housing boom. Those same new mechanisms of ‘structured’ and ‘synthetic’ finance mobilized a significant and steadily growing proportion of global savings and directed them into this super‐bubble as the world’s surplus countries came to fund America’s debt‐financed excess spending for perpetual reproduction of their surpluses. Anachronistic policy preferences among both surplus countries and the US prevented the proper functioning of various adjustment mechanisms before the inevitable financial‐fragility dynamic took hold to burst the bubble and throw the global economy into a steep downturn. The persistence of these global imbalances bodes ill for the medium‐term stability of the world economy and its recovery potential.

O endividamento do consumidor no cerne do capitalismo conduzido pelas finanças

Durante o verao de 2007 a crise imobiliaria dos EUA transformou-se em um arrocho de credito [credit crunch] global que esta ameacando transtornar a economia mundial. Enfrentamos hoje (meados de 2008) a perspectiva de uma desaceleracao significativa ou mesmo de uma recessao global. Nao importa qual desses cenarios por fim se revelara, o arrocho progressivo colocou em xeque a viabilidade a longo prazo de um padrao de crescimento global que, nas ultimas decadas, contou em grande medida com os Estados Unidos como o “comprador de ultima instância” do mundo. Essa dramatica reviravolta coloca em risco a transicao suave para um novo regime de acumulacao conduzido pelas financas [finance-led accumulation regime] e para um novo padrao de crescimento multipolar. Se a crise ainda nao e sistemica, o surto atual de problemas nos principais mercados financeiros do mundo certamente sinaliza o primeiro grande teste de resistencia desse novo regime. Nos gostariamos de enfocar, nesse artigo, um pilar central do regime – o endividamento das familias americanas – a fim de extrair algumas percepcoes plausiveis sobre a natureza e implicacoes da crise atual.

Who benefits from financial liberalization? Evidence from advanced and emerging market economies

In recent decades most countries have implemented significant reforms to foster financial liberalization. This article examines to what extent these reforms have benefited advanced economies and emerging market economies. We focus on four groups of countries: the G-7, other European countries, Latin America and East Asia over the period 1973–2006. We find evidence supporting the hypothesis that the different forms of financial liberalization affected growth differently in the four groups of countries. The main finding is that the benefits of financial liberalization are more important for advanced economies. In contrast, financial liberalization in emerging market economies has a weak positive impact on growth when its scope is limited, whereas full liberalization has been associated with slower economic growth.