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Apocalypse then: The Evolution of the North Atlantic Economy and the Global Crisis

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  • Mr. Trung T Bui
  • Mr. Tamim Bayoumi

Abstract

The financial crisis, originated from the collapse of US housing markets in 2008, reverberates around the world. Its destructive force was felt nowhere more keenly than Western Europe. Indeed, it continues to mire in financial volatility as the debt problem contagiously spreads around the periphery Euro area. Taking a wider historical view of the evolution over the recent decades of the North Atlantic economy, comprising North America and Western Europe, we argue that while trade links were in relative stasis, the increasing and uniquely-close Transatlantic financial relationship was a crucial conduit in transmitting US shocks into global ones.

Suggested Citation

  • Mr. Trung T Bui & Mr. Tamim Bayoumi, 2011. "Apocalypse then: The Evolution of the North Atlantic Economy and the Global Crisis," IMF Working Papers 2011/212, International Monetary Fund.
    • Handle: RePEc:imf:imfwpa:2011/212
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    References listed on IDEAS

    as
    1. Mr. Tamim Bayoumi & Mr. Trung T Bui, 2011. "Unforeseen Events Wait Lurking: Estimating Policy Spillovers From U.S. to Foreign Asset Prices," IMF Working Papers 2011/183, International Monetary Fund.
    2. International Monetary Fund, 2011. "United States: Selected Issues," IMF Staff Country Reports 2011/202, International Monetary Fund.
    3. Michael Ehrmann & Marcel Fratzscher & Roberto Rigobon, 2011. "Stocks, bonds, money markets and exchange rates: measuring international financial transmission," Journal of Applied Econometrics, John Wiley & Sons, Ltd., vol. 26(6), pages 948-974, September.
    4. International Monetary Fund, 2010. "Deconstructing the International Business Cycle: Why does a U.S. sneeze give the rest of the world a cold?," IMF Working Papers 2010/239, International Monetary Fund.
    5. International Monetary Fund, 2011. "The United States: Spillover Report: 2011 Article IV Consultation," IMF Staff Country Reports 2011/203, International Monetary Fund.
    6. Mr. Francis Vitek, 2012. "Policy Analysis and Forecasting in the World Economy: A Panel Unobserved Components Approach," IMF Working Papers 2012/149, International Monetary Fund.
    7. Neely, Christopher J., 2015. "Unconventional monetary policy had large international effects," Journal of Banking & Finance, Elsevier, vol. 52(C), pages 101-111.
    8. Patrick McGuire & Goetz von Peter, 2009. "The US dollar shortage in global banking," BIS Quarterly Review, Bank for International Settlements, March.
    9. Mr. Francis Vitek, 2010. "Monetary Policy Analysis and Forecasting in the Group of Twenty: A Panel Unobserved Components Approach," IMF Working Papers 2010/152, International Monetary Fund.
    10. Roberto Rigobon, 2003. "Identification Through Heteroskedasticity," The Review of Economics and Statistics, MIT Press, vol. 85(4), pages 777-792, November.
    11. International Monetary Fund, 2009. "United States: Selected Issues," IMF Staff Country Reports 2009/229, International Monetary Fund.
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    Cited by:

    1. Mr. Tamim Bayoumi & Mr. Trung T Bui, 2012. "Global Bonding: Do U.S. Bond and Equity Spillovers Dominate Global Financial Markets?," IMF Working Papers 2012/298, International Monetary Fund.
    2. Mr. Tamim Bayoumi, 2014. "After the Fall: Lessons for Policy Cooperation from the Global Crisis," IMF Working Papers 2014/097, International Monetary Fund.

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    More about this item

    Keywords

    WP; market; financial market; funding; IMF staff calculation; bank; Financial linkages; financial regulation; spillovers; market risk premiums; wholesale funding; BIS banking data; shock to US; funding market; funding cost; Commercial banks; Bonds; Investment banking; Bond yields; Western Europe; Global; North America; Europe;
    All these keywords.

    JEL classification:

    • E02 - Macroeconomics and Monetary Economics - - General - - - Institutions and the Macroeconomy
    • F34 - International Economics - - International Finance - - - International Lending and Debt Problems
    • N00 - Economic History - - General - - - General
    • N10 - Economic History - - Macroeconomics and Monetary Economics; Industrial Structure; Growth; Fluctuations - - - General, International, or Comparative

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