Subscribe to The Informer for monthly expert analysis, and to Events for advance notice of visiting world leaders and distinguished guests.
You may unsubscribe from Lowy Institute newsletters at any time. For information on our privacy practices and how to unsubscribe, see our Privacy Policy.
Subscribe to The Informer for monthly expert analysis, and to Events for advance notice of visiting world leaders and distinguished guests.
You may unsubscribe from Lowy Institute newsletters at any time. For information on our privacy practices and how to unsubscribe, see our Privacy Policy.
This Working Paper, by Warwick McKibbin and Andrew Stoeckel, models the global financial crisis as a combination of shocks to global housing markets and sharp increases in risk premia of firms, households and international investors in an intertemporal (or DSGE) global model. The model has six sectors of production and trade in 15 major economies and regions.
The global financial crisis: causes and consequences
About the authors
Warwick McKibbin
Professor Warwick McKibbin was a Professorial Fellow at the Lowy Institute for International Policy until October 2012.
Topics
The paper shows that the shocks observed in financial markets can be used to generate the severe economic contraction in global trade and production currently being experienced in 2009.
The results show that the future of the global economy depends critically on whether the shocks to risk are expected to be permanent or temporary.
