Country Crisis Deck

Question 1

Argentina

Answer 1

1998-2001
Brazil real depreciated
Hyperinflation solution was budget deficit and Currency Board.
2000 fell into recession and currency VERY overvalued - after abandoning currency board, exchange rate fell to fundamental value ($0.32) and 2002 started recovery

100 year bonds

Question 2

China

Answer 2

2008 2018
after 2008 crisis, their growth slowed because of decreased net exports.
interest rates low and private companies took on a lot of debt

Question 3

Dubai

Answer 3

2008
oil price plummet
20B debt problem - bailed out by Abu Dhabi

• recovered partly as Chinese companies reentered Dubai market

Question 4

Ecuador

Answer 4

1999- 2000
credit boom due to bad financial supervision.

banks were very connected to businesses.

Dollarization

Question 5

Germany

Answer 5

1919 1923
hyperinflation
WWI 
mark got fixed to coal (bad to do this)
Retenmark

Question 6

Greece

Answer 6

Debt crisis 2009-2018
Spent too much on Olympics
Austerity Measures (EU loans Greece 240B)

Question 7

Hong Kong

Answer 7

1997 Financial Crisis
- starts when Thailand floating currency collapses

• too much foreign investment
• government rose interest rates to slow economic growth
• stock market takes a hit
• HKMA acted as central bank and helped - currency board

Question 8

Hungary

Answer 8

1945 1946
Hungarian Hyperinflation

• pengo pegged to gold standard and was stable
• agricultural hurt and debt accumulation
• Nazis ended gold standard and printed a ton of money and inflation went up 350% per day
• Forint introduced

Question 9

Iceland

Answer 9

2008-2010

• in 2008 Iceland banks too big to be bailed out by government .Bank collapse

depreciated krona
stock market shut down

IMF loan
Fiscal Austerity (tax increase spending cuts)
reinstate smaller banks
wages fell so unemployment not that bad

Question 10

Japan

Answer 10

Lost decade
1991
Plaza Accord: over appreciated yen, reduce economic growth

Bubble burst - asset prices fall, bail out financial institutions

liquidity trap: interest rate 0 and savings high monetary expansion policy doesn’t work

vertical IS curve: when r decrease, GDP doesn’t expand
economic expansion halted for 10+ years

quantitative easing solution
still has deficits

Question 11

Mexico

Answer 11

Tequila crisis 1994
fixed exchange rate - OVERVALUED (foreign reserves decreased as they bought pesos to keep fundamental rate close to official rate)

Capital flight: foreign investment decrease a lot

CA deficit
liquidity problem
short term bonds = debt problem

Question 12

UK

Answer 12

2008 - 2010 
recession 
Credit Crunch": bank gave too many loans- couldn't back them 
- housing bubble burst 
- global recession 
- debt and financial austerity in
 Eurozone = low aggregate demand 

• oil prices rise, people consume less, bank didn’t want to cut interest rates at first
• then expansionary monetary policy - interest rates cut

Quantitative easing , tax cut (value added tax)

bank bailouts - more liquidity

Question 13

US China Trade War

Answer 13

hits china’s monetary policy plan to manage debt crisis.

maybe political (trump supporters do agriculture)

Question 14

Venezuela

Answer 14

Petro  2017 
hyper inflation
Venezuela oil reserves 
little information 
linked to oil reserves 
still allows government control

Question 15

Zimbabwe

Answer 15

2000 - 2015
hyperinflation
79.6B% inflation 2008
production decline maize and tobacco

debt
price freeze - goods shortage in economy

dollarization stop printing him dollars - accept other currencies (USD 80% of transactions)