TY - JOUR AU - Jagannathan,Ravi AU - Kapoor,Mudit AU - Schaumburg,Ernst TI - Causes of the Great Recession of 2007-9: The Financial Crisis is the Symptom not the Disease! JF - National Bureau of Economic Research Working Paper Series VL - No. 15404 PY - 2009 Y2 - October 2009 DO - 10.3386/w15404 UR - http://www.nber.org/papers/w15404 L1 - http://www.nber.org/papers/w15404.pdf N1 - Author contact info: Ravi Jagannathan Kellogg Graduate School of Management Northwestern University 2001 Sheridan Road Leverone/Anderson Complex Evanston, IL 60208-2001 Tel: 847/491-8338 Fax: 847/491-5719 E-Mail: rjaganna@kellogg.northwestern.edu Mudit Kapoor Indian School of Business Gachibowli Hyderabad - 500032 India E-Mail: mudit_kapoor@isb.edu Ernst Schaumburg AQR Capital Management LLC Greenwich Plaza Greenwich, CT 06830 E-Mail: ernst.schaumburg@gmail.com AB - Globalization has made it possible for labor in developing countries to augment labor in the developed world, without having to relocate, in ways not thought possible only a few decades ago. We argue that this large increase in the developed world's effective labor supply, triggered by geo-political events and technological innovations, coupled with the inability of existing institutions in the US and developing nations themselves to cope with this shock set the stage for the great recession. The financial crisis in the US was but the first acute symptom. ER -