International Contagion through Leveraged Financial Institutions
- (pp. 152-89)
Abstract
The 2008 –2009 financial crises, while originating in the United States, witnessed a drop in asset prices and output that was at least as large in the rest of the world. We investigate, in the context of a simple two-country model, whether this could have been the result of transmission through leveraged financial institutions. The paper highlights what the various transmission mechanisms associated with balance sheet losses are. For realistic parameters we find that the model cannot account for the global nature of the crisis, both in terms of the size of the impact and the extent of transmission.Citation
van Wincoop, Eric. 2013. "International Contagion through Leveraged Financial Institutions." American Economic Journal: Macroeconomics, 5 (3): 152-89. DOI: 10.1257/mac.5.3.152Additional Materials
JEL Classification
- E32 Business Fluctuations; Cycles
- E44 Financial Markets and the Macroeconomy
- F44 International Business Cycles
- G01 Financial Crises
- G21 Banks; Depository Institutions; Micro Finance Institutions; Mortgages
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