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- Publisher
- American Economic Association
- Copyright
- Copyright © 2013 by the American Economic Association
- Subject
- The Financial Crisis: Lessons for International Macroeconomics Conference, Paris, France, October 28–29, 2011
- ISSN
- 1945-7715
- eISSN
- 1945-7715
- DOI
- 10.1257/mac.5.3.152
- Publisher site
- See Article on Publisher Site
Abstract
Abstract The 2008 –2009 financial crises, while originating in the United States, witnessed a drop in asset prices and output that was at least as large in the rest of the world. We investigate, in the context of a simple two-country model, whether this could have been the result of transmission through leveraged financial institutions. The paper highlights what the various transmission mechanisms associated with balance sheet losses are. For realistic parameters we find that the model cannot account for the global nature of the crisis, both in terms of the size of the impact and the extent of transmission. (JEL E32, E44, F44, G01, G21 )
Journal
American Economic Journal: Macroeconomics – American Economic Association
Published: Jul 1, 2013