The 2007-2009 Financial Crisis, Global Imbalances and Capital Flows: Implications for Reform
Posted: 6 Mar 2010
Abstract
The paper discusses the currents that led to the 2007-2009 financial crisis. We discuss the crisis in a historical context and present evidence regarding the incidence and unit price of risk. Our results show that the unit price of risk prior to the subprime crisis is comparable to the price of risk prior to the great depression and similar to the price of risk at onset of the technology bubble. We then discuss global imbalances, the associated risks with regard to international optimal allocation of capital, and arrangements to minimize problems of global imbalances.
Keywords: Financial crisis, International capital flows
JEL Classification: G28, F32, F42
Suggested Citation: Suggested Citation