We present data on debt accumulation in Australia and the United States, and
tentative data on Romania, to pose the question of whether Romania might
experience a credit crunch as a result of the US subprime financial crisis. We
develop a model of a credit crunch in a pure credit economy with endogenous
money creation, to show how changes in bank lending practices and borrower
repayment behaviour can bring about an economic decline.Comment: 21 pages, 12 figure