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Recession and rebalancing: How the housing and credit crises will impact US real activity

Authors :
Rudiger von Arnim
Source :
Journal of Policy Modeling. 31:309-324
Publication Year :
2009
Publisher :
Elsevier BV, 2009.

Abstract

This paper assesses how the current housing and credit crisis will impact US real activity, and how recession interacts with adjustment of global imbalances. A simple real-side model with decreasing returns to factors and non-clearing goods and labor markets is disaggregated into traded and non-traded sectors and three regions (US, EU and Asia). A three region model offers two degrees of freedom and six candidate variables for endogeneity in international accounts. Applying standard income and elasticities approaches as well as a less standard “ Bretton Woods II ” closure in simulations suggests external imbalances can be reduced in the current recession with a mix of fiscal expansion and some Asian real appreciation.

Details

ISSN :
01618938
Volume :
31
Database :
OpenAIRE
Journal :
Journal of Policy Modeling
Accession number :
edsair.doi...........68bc081a09df85d7f1030b6a9b96cd34