In a detailed 2014 study of financial crises going back to 1870, the economist Alan Taylor and his colleagues concluded: “The idea that financial crises typically have their roots in fiscal [government borrowing] problems is not supported by history.” The origin of the trouble is normally found in the private sector, though countries that enter the crisis with heavy government debt will suffer from a longer and deeper recession, simply because the government will find it hard to borrow to finance bailouts or stimulus spending.
