Apocalypse Then: The Evolution of the North Atlantic Economy and the Global Crisis
In: The Australian Economy in the 2000s
The financial crisis that struck the global economy in late 2008 had its origins in excesses in the US housing market. Its reverberations, however, were felt around the world and nowhere more keenly than in Western Europe. While North Atlantic trade links were in relative stasis, the North Atlantic furnished a uniquely close relationship across financial institutions, as a combination of dominant US financial markets, European competition policy, and differences in financial regulation made the European banking system heavily dependent on dollar wholesale funding. Empirical estimates and macroeconomic model simulations indicate that growth spillovers predominantly flow westwards across the North Atlantic. The bellwether nature of US financial markets creates uniquely large spillovers to the rest of the world even in normal times, and these spillovers are only enhanced if disruptions to bank wholesale funding markets are added -- as occurred during the recent global crisis.
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|This chapter was published in: Hugo Gerard & Jonathan Kearns (ed.) The Australian Economy in the 2000s, Reserve Bank of Australia, pages , 2011.|
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References listed on IDEAS
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
- Christopher J. Neely, 2010. "The large scale asset purchases had large international effects," Working Papers 2010-018, Federal Reserve Bank of St. Louis.
- Francis Vitek, 2010. "Monetary Policy Analysis and Forecasting in the Group of Twenty; A Panel Unobserved Components Approach," IMF Working Papers 10/152, International Monetary Fund.
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- Francis Vitek, 2012. "Policy Analysis and Forecasting in the World Economy; A Panel Unobserved Components Approach," IMF Working Papers 12/149, International Monetary Fund.
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