Heterogeneous global booms and busts
Farboodi, M. & Kondor, P.
(2022).
Heterogeneous global booms and busts.
American Economic Review,
112(7), 2178 - 2212.
https://doi.org/10.1257/aer.20181830
(2022).
Heterogeneous global booms and busts.
American Economic Review,
112(7), 2178 - 2212.
https://doi.org/10.1257/aer.20181830
We investigate the heterogeneous boom and bust patterns across countries that emerge as a result of global shocks. Our analysis sheds light on the emergence of core and periphery countries, and the joint determination of the depth of recessions and tightness of credit across countries. The model implies that interest rates are similar across core and periphery countries in booms, with larger credit and output growth in periphery countries. However, a common global shock that leads to a credit crunch across the globe gives rise to a sharper spike in interest rates and a deeper recession in periphery countries, while a credit flight to the core alleviates the adverse consequences in these countries.
Explore Further
- E44 - Financial Markets and the Macroeconomy
- E43 - Determination of Interest Rates; Term Structure of Interest Rates
- E21 - Macroeconomics: Consumption; Saving; Aggregate Physical and Financial Consumer Wealth
- G15 - International Financial Markets
- E32 - Business Fluctuations; Cycles
-
Kondor, P. & Farboodi, M.
(2022).
Code for: Heterogeneous Global Booms and Busts.
[Dataset]. OpenICPSR.
https://doi.org/10.3886/e162281