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Causes of the Financial Crisis: An Assessment using UK Data

Author

Listed:
  • Christopher Martin

    (University of Bath)

  • C Milas

    (Keele University
    Rimini Centre for Economic Analysis)

Abstract

We present empirical evidence that the marked rise in liquidity in 2001-2007 was due to large and persistent current account deficits and loose monetary policy. If this increase in liquidity was a pre-condition for the financial crisis that began in July 2007, we can conclude that loose monetary and the deterioration in current account balances were causes of the financial crisis.

Suggested Citation

  • Christopher Martin & C Milas, 2009. "Causes of the Financial Crisis: An Assessment using UK Data," Department of Economics Working Papers 18/09, University of Bath, Department of Economics.
    • Handle: RePEc:eid:wpaper:15961
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    References listed on IDEAS

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    More about this item

    Keywords

    liquidity; monetary policy; financial crisis; global imbalances;
    All these keywords.

    JEL classification:

    • G01 - Financial Economics - - General - - - Financial Crises
    • E44 - Macroeconomics and Monetary Economics - - Money and Interest Rates - - - Financial Markets and the Macroeconomy
    • E52 - Macroeconomics and Monetary Economics - - Monetary Policy, Central Banking, and the Supply of Money and Credit - - - Monetary Policy

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