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Recession and rebalancing: How the housing and credit crises will impact US real activity

Rudiger von Arnim (rudiger.vonarnim@economics.utah.edu)

Journal of Policy Modeling, 2009, vol. 31, issue 3, 309-324

Abstract: This paper assesses how the current housing and credit crisis will impact US real activity, and how recession interacts with adjustment of global imbalances. A simple real-side model with decreasing returns to factors and non-clearing goods and labor markets is disaggregated into traded and non-traded sectors and three regions (US, EU and Asia). A three region model offers two degrees of freedom and six candidate variables for endogeneity in international accounts. Applying standard income and elasticities approaches as well as a less standard "Bretton Woods II" closure in simulations suggests external imbalances can be reduced in the current recession with a mix of fiscal expansion and some Asian real appreciation.

Keywords: Global; imbalances; Bretton; Woods; II; CGE-model (search for similar items in EconPapers)
Date: 2009
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Citations: View citations in EconPapers (10)

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Persistent link: https://EconPapers.repec.org/RePEc:eee:jpolmo:v:31:y:2009:i:3:p:309-324

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