A Caricature (Model) of the World Economy
Name
Caballero10-17.pdf
Size
149.86 KB
Format
Adobe PDF
Checksum (MD5)
9e5990cc09c822c5b2448f850acd61cc
Author(s)
Caballero, Ricardo
Date Issued
November 23, 2010
Publisher
Cambridge, MA: Department of Economics, Massachusetts Institute of Technology
Series/Report no.
Working paper, Massachusetts Institute of Technology, Dept. of Economics;10-17
Abstract
This paper provides a stylized model of the workings of a global economy where one of its key driving factors is economic agents’ continuous struggle to find assets in which to park financial resources. This struggle naturally comes with euphoria and disappointments, as many of the "parking lots" are built too quickly or are not of the desired size. There are also global asymmetries, as some countries are endowed with more empty .land. than others, and their growth potential may also differ. I use this caricature of the world economy to describe several of the main driving forces behind recent global macroeconomic events and to discuss "quantitative" easing policies.
Subjects
Global equilibrium
shortage of assets
interest rates
asset prices
booms and busts
sovereign crises
financial reform and development
fiscal deficits
flights to quality
decoupling
quantitative easing
Terms of Use
An error occurred on the license name.
Persistent DSpace Link
