HKS Affiliated Authors
Minos A. Zombanakis Professor of the International Financial System
Excerpt
Excerpt
Does Reserve Accumulation Crowd Out Investment? Carmen Reinhart, July 2015, Paper. "It is understood that investment serves as a shock absorber in times of crisis. The duration of the drag on investment, however, is perplexing. For the Asian economies we study, average investment/GDP is about 6 percentage points lower during 1998-2014 than its average level in the decade before the Asian crisis; the decline is greater if China is excluded. We document how in the wake of crisis home bias in finance increases markedly as public and private sectors look inward when external financing becomes prohibitively costly or undesirable..." Link