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International Recessions

  • Vincenzo Quadrini

    (University of Southern California)

  • Fabrizio Perri

    (University of Minnesota)

The 2008-2009 US crisis is characterized by an unprecedented degree of international synchronization, as all other G7 countries experienced large contractions. The international synchronization of the recent crisis is not present in many of the previous US contractions. We study a two-country model with financial markets frictions and show that economies display greater co-movements during recessions when `credit shocks' play an important role as a source of business cycle fluctuations and countries are financially integrated.

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Paper provided by Society for Economic Dynamics in its series 2011 Meeting Papers with number 123.

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Date of creation: 2011
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Handle: RePEc:red:sed011:123
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