Passage 1
The slowdown of the industrial countries in 1991 partly originated in structural problems inheri-ted from the 1980s.Slower growth in Europe in 1991 revealed that unemployment, for instance, was still a structurally problematic area.The unemployment rate in the four largest European economies was 7.8 per cent in 1990, near the peak of the business cycle, and rose to 8.3 per cent in 1991. Financial stress brought on by excessive debt in the household and corporate sectors was an example of another kind of structural problem, in particular for the economies of Japan and the United States. Financial institutions in these two countries adopted more conservative lending policies, curtailing fi-nancing of higher - risk projects such as commercial construction and highly leveraged corporate transactions.A number of weaker institutions were also consolidated through bankruptcy, merger and reorganization.These developments played some part in the general tightening of credit during 1991, which may have helped to slow the pace of investment in the United States and Japan.Weakgrowth of credit and a fall in some asset pricesprobably slowedconsumption, as well.
Did “a fall in some asset prices” have anything to do with “weak growth of credit”?()
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