Year: 2011
Type: article
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)
DOI: 10.1257/mac.5.3.152
Author: Eric van Wincoop
Institutions: National Bureau of Economic Research, University of Virginia
Language: English
Subfield: Finance
Domain: Social Sciences
Open Access status: green
OpenAlex ID: W2000217777