The prospects for the world economy remain promising despite the effective closure of many credit markets since early August. Growth will be bruised rather than hurt. The forecast of 4.7 per cent in 2008 will represent only the tenth year since 1970 when global growth has exceeded 4.5 per cent....

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Given the magnitude of 'global imbalances' in the run-up to the subprime crisis, we test for an impact of the current account balance on the probability of banking crises in OECD countries since 1980. This variable has been neglected in most early warning models to date, despite its prominence...