International Recessions

Fabrizio Perri and Vincenzo Quadrini

American Economic Review, 2018, vol. 108, issue 4-5, 935-84

Abstract: Macro developments leading up to the 2008 crisis displayed an unprecedented degree of international synchronization. Before the crisis, all G7 countries experienced credit growth and, around the time of the Lehman bankruptcy, they all faced sharp and large contractions in both real and financial activity. Using a two-country model with financial frictions, we show that a global liquidity shortage induced by pessimistic self-fulfilling expectations can quantitatively generate patterns like those observed in the data. The model also suggests that crises are less frequent with more international financial integration but, when they hit, they are larger and more synchronized across countries.

JEL-codes: E23 E32 E44 F44 G01 (search for similar items in EconPapers)
Date: 2018
Note: DOI: 10.1257/aer.20140412
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Citations: View citations in EconPapers (42)

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Related works:
Working Paper: International Recessions (2011)
Working Paper: International recessions (2011)
Working Paper: International Recessions (2011)
Working Paper: International Recessions (2011)
Working Paper: International Recessions (2011)
Working Paper: International recessions (2010)
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