Financial Crash, Commodity Prices and Global Imbalances
In this paper we argue that the persistent global imbalances, the subprime crisis, and the volatile oil and asset prices that followed it, are tightly interconnected. They all stem from a global environment where sound and liquid financial assets are in scarce supply.
We thank Kathryn Dominguez, Doug Elmendorf, Carmen Reinhart, and Larry Summers for their comments and Gabriel Chodorow-Reich for excellent research assistance. Ricardo Caballero and Pierre-Olivier Gourinchas thank the NSF for financial support. Pierre-Olivier Gourinchas acknowledges the support of the Coleman-Fung Risk Management Research Center. First draft: July 2008. The views expressed herein are those of the author(s) and do not necessarily reflect the views of the National Bureau of Economic Research.
Financial Crash, Commodity Prices, and Global Imbalances Ricardo J. Caballero, Emmanuel Farhi and Pierre-Olivier Gourinchas Brookings Papers on Economic Activity , Vol. 2008, (Fall, 2008) , pp. 1-55