Principles of Macroeconomics / Unit 7 MAC 0614 short lesson, about 20 seconds
Sudden Stops
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The idea
The sharper danger is a sudden stop: foreign lenders who were willing yesterday withdraw quickly, and the borrowing that funded spending disappears at once.
In practice
Several East Asian economies went through this in nineteen ninety-seven and ninety-eight, and deep recessions followed.
Where people slip
What makes a sudden stop possible is short-term lending that can leave fast, which is why unit thirteen returns to it.
Your place on the trail
Every lesson rests on earlier ones and opens later ones. Tap any to jump.
Builds on
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