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The World Credit Crisis: Understanding It, and What To Do

Author

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  • W. Max Corden

    () (Department of Economics, The University of Melbourne)

Abstract

This paper expounds a story in four stages to explain the world credit crisis, namely: (1) too much credit - an international perspective, (2) too much risk - reaction to low real interest rate, (3) the fatal flaw - the new complex financial instruments, and (4) the panic- bank lending dries up. The paper also discusses the relationship of this crisis to the often-expected crisis of the global imbalances, and it outlines various policy implications.

Suggested Citation

  • W. Max Corden, 2008. "The World Credit Crisis: Understanding It, and What To Do," Melbourne Institute Working Paper Series wp2008n25, Melbourne Institute of Applied Economic and Social Research, The University of Melbourne.
  • Handle: RePEc:iae:iaewps:wp2008n25
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    File URL: http://melbourneinstitute.unimelb.edu.au/downloads/working_paper_series/wp2008n25.pdf
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    References listed on IDEAS

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    1. W. Max Corden, 2007. "Those Current Account Imbalances: A Sceptical View -super-1," The World Economy, Wiley Blackwell, vol. 30(3), pages 363-382, March.
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    Cited by:

    1. Pomfret, Richard, 2010. "The financial sector and the future of capitalism," Economic Systems, Elsevier, vol. 34(1), pages 22-37, March.
    2. Ian M. McDonald, 2009. "The Global Financial Crisis and Behavioural Economics," Economic Papers, The Economic Society of Australia, vol. 28(3), pages 249-254, September.
    3. Richard Pomfret, 2009. "The Post-2007 Financial Crisis and Policy Challenges facing Australia," Economic Papers, The Economic Society of Australia, vol. 28(3), pages 255-263, September.

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