Financial Crash, Commodity Prices, and Global Imbalances

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Financial Crash, Commodity Prices, and Global Imbalances

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Title: Financial Crash, Commodity Prices, and Global Imbalances
Author: Gourinchas, Pierre-Oliver; Farhi, Emmanuel; Caballero, Ricardo J.

Note: Order does not necessarily reflect citation order of authors.

Citation: Caballero, Ricardo J., Emmanuel Farhi, and Pierre-Olivier Gourinchas. 2008. Financial crash, commodity prices, and global imbalances. Brookings Papers on Economic Activity 2: 1-55.
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Abstract: The current financial crisis has its origins in global asset scarcity, which led to large capital flows toward the United States and to the creation of asset bubbles that eventually burst. In its first phase the crash exacerbated the shortage of assets in the world economy, which triggered a partial re-creation of the bubble in commodities markets, and oil markets in particular. This bubble in turn led to an increase in petrodollars seeking financial assets in the United States, which became a source of stability for the U.S. external balance. The second phase of the crisis is more conventional and began to emerge in the summer of 2008, when it became apparent that the financial crisis would permeate the real economy and sharply slow global growth. This slowdown worked to reverse the tight commodity market conditions required for a bubble to develop, ultimately destroying the commodity bubble.
Published Version: http://dx.doi.org/10.1353/eca.0.0013
Other Sources: http://www.nber.org/papers/w14521
Terms of Use: This article is made available under the terms and conditions applicable to Open Access Policy Articles, as set forth at http://nrs.harvard.edu/urn-3:HUL.InstRepos:dash.current.terms-of-use#OAP
Citable link to this page: http://nrs.harvard.edu/urn-3:HUL.InstRepos:3229095

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  • FAS Scholarly Articles [7501]
    Peer reviewed scholarly articles from the Faculty of Arts and Sciences of Harvard University
 
 

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