Working Paper: NBER ID: w14521
Authors: Ricardo J. Caballero; Emmanuel Farhi; Pierre-Olivier Gourinchas
Abstract: 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.
Keywords: No keywords provided
JEL Codes: F3
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| Global asset scarcity (G19) | Large capital flows to the U.S. (F32) |
| Large capital flows to the U.S. (F32) | Creation of asset bubbles (G10) |
| Asset bubbles (G19) | Crash in the real estate market (G01) |
| Crash in the real estate market (G01) | Exacerbation of asset shortages (E44) |
| Exacerbation of asset shortages (E44) | Recreation of commodity bubble (E32) |
| Commodity bubble (Q02) | Increase in petrodollars seeking financial assets in the U.S. (F31) |
| Crash in the real estate market (G01) | Global shortage of assets (F65) |
| Global shortage of assets (F65) | Bubble in commodities (Q02) |