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