American Economic Review
ISSN 0002-8282 (Print) | ISSN 1944-7981 (Online)
International Recessions
American Economic Review
vol. 108,
no. 4-5, April 2018
(pp. 935–84)
(Complimentary)
Abstract
Macro developments leading up to the 2008 crisis displayed an unprecedented degree of international synchronization. Before the crisis, all G7 countries experienced credit growth and, around the time of the Lehman bankruptcy, they all faced sharp and large contractions in both real and financial activity. Using a two-country model with financial frictions, we show that a global liquidity shortage induced by pessimistic self-fulfilling expectations can quantitatively generate patterns like those observed in the data. The model also suggests that crises are less frequent with more international financial integration but, when they hit, they are larger and more synchronized across countries.Citation
Perri, Fabrizio, and Vincenzo Quadrini. 2018. "International Recessions." American Economic Review, 108 (4-5): 935–84. DOI: 10.1257/aer.20140412Additional Materials
JEL Classification
- E23 Macroeconomics: Production
- E32 Business Fluctuations; Cycles
- E44 Financial Markets and the Macroeconomy
- F44 International Business Cycles
- G01 Financial Crises