NATIONAL BUREAU OF ECONOMIC RESEARCH
NATIONAL BUREAU OF ECONOMIC RESEARCH

The Effects of the Saving and Banking Glut on the U.S. Economy

Alejandro Justiniano, Giorgio Primiceri, Andrea Tambalotti

NBER Working Paper No. 19635
Issued in November 2013
NBER Program(s):   EFG   IFM   ME

We use a quantitative equilibrium model with houses, collateralized debt and foreign borrowing to study the impact of global imbalances on the U.S. economy in the 2000s. Our results suggest that the dynamics of foreign capital flows account for between one fourth and one third of the increase in U.S. house prices and household debt that preceded the financial crisis. The key to these findings is that the model generates the sustained low level of interest rates observed over that period.

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Document Object Identifier (DOI): 10.3386/w19635

Published: The Effects of the Saving and Banking Glut on the U.S. Economy, Alejandro Justiniano, Giorgio E. Primiceri, Andrea Tambalotti. in NBER International Seminar on Macroeconomics 2013, Clarida, Gopinath, and Reichlin. 2014

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