same studies, however, emphasize the heterogeneity of country experiences, reflecting the heterogeneity of crises and of how effectively they are managed. Haugh et al. (2009) find a sharp downshift in labor and TFP growth rates between the 10 years before and after the onset of the Japanese crisis. They find negative effects around the time of the Nordic crises of the early 1990s when they limit the comparison to the 5 years before and after the event. IMF (2009) points to cases in which there is evidence of lower employment and a lower capital/labor ratio following crises. In these episodes, TFP growth typically recovers from the low levels plumbed during the crisis, but not entirely.As noted, the limitation of these analyses and the difficulty of knowing what to generalize from them is the difficulty of measuring the pre-crisis trend rate of growth. Crises often follow booms that bias upward estimates of the pre-crisis trend. Some authors, Krugman (2010) for example, dispute the implication: they argue that there is nothing wrong with using data from the pre-crisis boom and estimating the trend on the basis of peak-to-peak interpolation. The boom, in this view, may affect what is being produced (in the most recent case, more housing and financial services, fewer other goods and services) but not the economy's capacity to produce.Others who see the boom as pushing investment and capacity utilization beyond sustainable limits will not be convinced. Their approach is therefore to estimate the pre-crisis trend excluding the years preceding the crisis. In IMF (2009, p. 125), the Korean economy around the time of the 1997 financial crisis is used to illustrate this approach. First, a trend line is fit to output growth between 1987 and 1994. The 3 years immediately preceding the crisis are omitted from this trend calculation on the grounds that the economy may have been expanding unsustainably during the pre-crisis boom. This pre-crisis trend is then compared to post-crisis growth in the period 19982004. The two lines the extrapolation of pre-crisis output and actual post-crisis output first evolve in parallel but subsequently show signs of diverging, as if the capacity of the economy to grow was permanently impaired.This Korean example inadvertently illustrates the problem with the methodology. After more than two decades of rapid growth, the Korean economy's capacity to grow was already declining in the late 1980s.5 The labor force began expanding more slowly. The pool of underemployed labor in agriculture had been drained. Slower growth was a natural corollary of economic maturity. But this fact was disguised by the unsustainable investment binge of 19901997, which the country's large conglomerates financed by issuing debt and raising their leverage to ultimately dangerous heights. The investment/GDP ratio rose from the 30% typical of the 1970s and 1980s to nearly 40% before returning to its customary 30% following the crisis. Much of the additional investment in the intervening period was of dubious utility and productivity this was when the chaebol branched into unrelated businesses far removed from their core competencies.6 The implication is that the trend rate of growth prior