The Case for Optimism amid the Crisis

The current financial crisis in the United States raises a fundamental question: are these crises good or bad for long term growth? Some economists believe that crises have negative consequences for long run growth because of increased volatility and wealth destruction. Others believe that crises are opportunities to learn, reform and improve economic and political institutions. This view tends to see crises as a natural and potentially desirable phenomenon in the process of development, which allows important reforms to take place.