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CROSS‐COUNTRY CAUSES AND CONSEQUENCES OF THE 2008 CRISIS: INTERNATIONAL LINKAGES AND AMERICAN EXPOSURE
Author(s) -
Rose Andrew K.,
Spiegel Mark M.
Publication year - 2010
Publication title -
pacific economic review
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 0.34
H-Index - 33
eISSN - 1468-0106
pISSN - 1361-374X
DOI - 10.1111/j.1468-0106.2010.00507.x
Subject(s) - financial crisis , economics , epicenter , international economics , development economics , macroeconomics , civil engineering , engineering
We model the causes of the 2008 financial crisis together with its manifestations, using a cross‐country multiple indicator multiple cause model. We consider both national and, critically, international linkages between countries and potential crisis ‘epicentres’, including the United States. A country holding an epicentre's securities is exposed through a financial channel, while a country that exports to that epicentre is exposed through a real channel. We are unable to find strong evidence that international linkages can be associated with crisis incidence. In particular, exposure to the United States in either form has little impact. If anything, it appears to help.