"Red Star Spangled Banner" Scrutinizing the Root Causes of Financial Crisis
AbstractIn this article we inquire into the root causes of the present financial crisis by drawing on a Heckscher-Ohlin-Samuelson trade model. At the origin of the current crisis are global imbalances originating from distortions in relative prices. Due to impasses in international production, financial repression in countries that seek to suppress real appreciation has resulted in excessive capital-intensive production and an expansion of financial service sectors in flexible market economies. Moreover, financial globalization has been a vehicle for exporting real appreciation pressures from catching-up economies to mature economies, thus aggravating global imbalances.
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Bibliographic InfoPaper provided by Friedrich-Schiller-University Jena in its series Global Financial Markets Working Paper Series with number 05-2009.
Date of creation: 14 Jun 2010
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Web page: http://www.gfinm.de
Financial Crisis; Financial Repression; Heckscher-Ohlin-Samuelson Model;
Find related papers by JEL classification:
- E22 - Macroeconomics and Monetary Economics - - Macroeconomics: Consumption, Saving, Production, Employment, and Investment - - - Capital; Investment; Capacity
- E44 - Macroeconomics and Monetary Economics - - Money and Interest Rates - - - Financial Markets and the Macroeconomy
- F11 - International Economics - - Trade - - - Neoclassical Models of Trade
- F36 - International Economics - - International Finance - - - Financial Aspects of Economic Integration
- F41 - International Economics - - Macroeconomic Aspects of International Trade and Finance - - - Open Economy Macroeconomics
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- NEP-CBA-2010-07-31 (Central Banking)
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