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Sub-Prime Financial Crisis and US Policy Choices

Listed author(s):
  • Yonghyup Oh

    (Korea Institute for International Economic Policy)

  • Wonho Song

This paper argues that the subprime financial crisis reflects weakness in the real economy of the US from its start. Our comparison with prior US recessions indicates that the epicenters of most of the recessions were in the financial sector and that recessionary pressure was present in the last quarter of 2007 in the US economy. The high level of nations debts combined with a high rate of inflation show a difficult situation US policy makers face. At an international scene, there would be trade-off between protectionist policy measures and the USs role as a global sheriff. Effects of US policy measures, either monetary or fiscal, would be short-living, while more fundamental changes to create productivity gains would be the right policy for recovery of the US economy.

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File URL: http://www.eaber.org/node/22995
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Paper provided by East Asian Bureau of Economic Research in its series Finance Working Papers with number 22995.

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Date of creation: Jan 2008
Handle: RePEc:eab:financ:22995
Contact details of provider: Postal:
JG Crawford Building #13, Asia Pacific School of Economics and Government, Australian National University, ACT 0200

Web page: http://www.eaber.org

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References listed on IDEAS
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  1. Alejandro Cuñat & Marco Maffezzoli, 2007. "Can Comparative Advantage Explain the Growth of us Trade?," Economic Journal, Royal Economic Society, vol. 117(520), pages 583-602, April.
  2. Carmen M. Reinhart & Kenneth S. Rogoff, 2009. "Is the 2007 U.S. Sub-Prime Financial Crisis So Different? An International Historical Comparison," Panoeconomicus, Savez ekonomista Vojvodine, Novi Sad, Serbia, vol. 56(3), pages 291-299, September.
  3. Tamim Bayoumi & Douglas Laxton & Paolo Pesenti, 2004. "Benefits and spillovers of greater competition in Europe: a macroeconomic assessment," International Finance Discussion Papers 803, Board of Governors of the Federal Reserve System (U.S.).
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