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International recessions

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  • Vincenzo Quadrini

    (University of Southern California)

  • Fabrizio Perri

    (University of Minnesota)

Abstract

One key feature of the 2008-2009 crisis has been its international dimension, as most countries have experienced large synchronous contractions. The recent crisis has also been characterized by a sharp fall in employment but not in productivity. These two characterizing features of the recent recession are not present in many of the previous contractions. We develop an explicit model of financial frictions to show that these changes are consistent with the view that `credit shocks' have been playing a more prominent role as a source of business cycle fluctuations in an environment with international mobility of capital.

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Bibliographic Info

Paper provided by Society for Economic Dynamics in its series 2010 Meeting Papers with number 222.

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Date of creation: 2010
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Handle: RePEc:red:sed010:222

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  1. Game Thoery and Macroeconomics
    by paragwaknis in Musings of the Sorts on 2012-07-16 18:42:41
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