Heterogeneous Global Booms and Busts
Name
farboodi-kondor-2022-heterogeneous-global-booms-and-busts.pdf
Description
Published version
Size
1.9 MB
Format
Adobe PDF
Checksum (MD5)
c16510838443fe0c79583346446709ef
Author(s)
Farboodi, Maryam
Kondor, Péter
Date Issued
July 2022
Journal
American Economic Review
Publisher
American Economic Association
Citation
Farboodi, Maryam, and Péter Kondor. 2022. "Heterogeneous Global Booms and Busts." American Economic Review 112 (7): 2178–2212.
Version
Final published version
Abstract
We investigate the heterogeneous boom and bust patterns across countries that emerge as a result of global shocks. Our analysis sheds light on the emergence of core and periphery countries, and the joint determination of the depth of recessions and tightness of credit across countries. The model implies that interest rates are similar across core and periphery countries in booms, with larger credit and output growth in periphery countries. However, a common global shock that leads to a credit crunch across the globe gives rise to a sharper spike in interest rates and a deeper recession in periphery countries, while a credit flight to the core alleviates the adverse consequences in these countries. (JEL E21, E32, E43, E44, F44, G01, G15)
MIT Department
Sloan School of Manufacturing.
Terms of Use
Article is made available in accordance with the publisher's policy and may be subject to US copyright law. Please refer to the publisher's site for terms of use.
Persistent DSpace Link
DOI of Published Version
10.1257/aer.20181830
