Working Paper: NBER ID: w17353
Authors: Pierre-Olivier Gourinchas; Hélène Rey; Kai Truempler
Abstract: This paper studies the geography of wealth transfers during the 2008 global financial crisis. We construct valuation changes on bilateral external positions in equity, direct investment and portfolio debt at the height of the crisis to map who benefited and who lost on their external exposure. We find a very diverse set of fortunes governed by the structure of countries' external portfolios. In particular, we are able to relate the gains and losses on debt portfolios to the country's exposure to ABCP conduits and the extent of dollar shortage.
Keywords: Financial Crisis; Wealth Transfers; Global Economy
JEL Codes: F3; F33; F41
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| Financial crisis (G01) | Valuation changes in external portfolios (G11) |
| Exposure to ABCP conduits (G24) | Valuation losses in external debt portfolios (F34) |
| Dollar shortage in banking systems (F65) | Propensity to set up ABCP conduits (G24) |
| Dollar shortage in banking systems (F65) | Losses on external debt portfolios (F34) |
| US long position in risky equity assets (G12) | Losses in net equity portfolio (G11) |
| UK short position on equity (G12) | Gains from decline in equity liabilities (G32) |
| Holdings of US government securities by China (H63) | Negative wealth transfers due to markdowns on non-dollar reserves (F31) |