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The 2007-2009 financial crisis, global imbalances and capital flows: Implications for reform

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  • Kenc, Turalay
  • Dibooglu, Sel

Abstract

The paper discusses the currents that led to the 2007-2009 financial crisis. We discuss the crisis in a historical context and present evidence regarding the incidence and unit price of risk. Our results show that the unit price of risk prior to the subprime crisis is comparable to the price of risk prior to the great depression and similar to the price of risk at onset of the technology bubble. We then discuss global imbalances, the associated risks with regard to international optimal allocation of capital, and arrangements to minimize problems of global imbalances.

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Bibliographic Info

Article provided by Elsevier in its journal Economic Systems.

Volume (Year): 34 (2010)
Issue (Month): 1 (March)
Pages: 3-21

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Handle: RePEc:eee:ecosys:v:34:y:2010:i:1:p:3-21

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Keywords: Financial crisis International capital flows;

References

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  1. Carmen M. Reinhart & Kenneth S. Rogoff, 2008. "Is the 2007 US Sub-prime Financial Crisis So Different? An International Historical Comparison," American Economic Review, American Economic Association, vol. 98(2), pages 339-44, May.
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  22. Kanokwan Chancharoenchai & Sel Diboog�Lu & Ike Mathur, 2005. "Stock Returns and the Macroeconomic Environment Prior to the Asian Crisis in Selected Southeast Asian Countries," Emerging Markets Finance and Trade, M.E. Sharpe, Inc., vol. 41(4), pages 38-56, August.
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Cited by:
  1. Naifar, Nader, 2011. "What explains default risk premium during the financial crisis? Evidence from Japan," Journal of Economics and Business, Elsevier, vol. 63(5), pages 412-430, September.

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