The Potential Impact of the Global Financial Crisis on World Trade

McKibbin, Warwick J.; Stoeckel, Andrew

The Potential Impact of the Global Financial Crisis on World Trade

Autores

Descripción

This paper models the global financial crisis as a combination of shocks to global housing markets and sharp increases in risk premia of firms, households and international investors in a global economic model. The model has six sectors of production and trade in 15 major economies and regions. The paper shows that the shocks observed in financial markets can be used to generate the severe economic contraction in global trade and production experienced in 2009. In particular the distinction between the production and trade of durable and non durable goods plays a key role in explaining the much larger contraction in trade than GDP experienced by most economies. The paper explores the implications of the large increase in fiscal deficits and the implications of a global trade war in response to the financial crisis.

Palabras clave

ACCOUNTING, ADVANCED ECONOMIES, ADVERSE EFFECT, AGGREGATE SUPPLY, AGRICULTURE, AMOUNT OF CAPITAL, ARBITRAGE, ASSET PRICE, ASSET PRICES, ASSET VALUATION, BAILOUTS, BALANCE SHEETS, BANK BORROWING, BANK GOVERNORS, BANK LENDING, BANK OPERATIONS, BANKING SYSTEMS, BANKRUPTCY, BASIS POINTS, BENCHMARK, BOND SPREADS, BOND YIELDS, BONDS, BUDGET CONSTRAINT, CAPITAL ACCUMULATION, CAPITAL FLOW, CAPITAL FLOWS, CAPITAL RAISING, CAPITAL STOCK, CARBON EMISSIONS, CASH TRANSFERS, CENTRAL BANK, CENTRAL BANK GOVERNORS, CENTRAL BANKS, COMMODITY, COMMODITY PRICE, COMMODITY PRICES, CONSUMER LOANS, CONSUMERS, CORPORATE BONDS, CORPORATE TAX, COST OF CAPITAL, CURRENT ACCOUNT BALANCES, CURRENT ACCOUNT DEFICITS, CURRENT ACCOUNT SURPLUSES, DEBT, DEFAULTS, DEFLATION, DEPOSITS, DEVELOPING COUNTRIES, DEVELOPING COUNTRY, DEVELOPING ECONOMIES, DIRECT PAYMENTS, DISCOUNT RATES, DISPOSABLE INCOME, DOMESTIC BANKS, DOMESTIC ECONOMY, DRIVERS, DURABLE, DURABLE GOOD, DURABLE GOODS, DURABLES, ECONOMIC GROWTH, ECONOMIC OUTLOOK, ECONOMIC RECOVERY, ELASTICITY, EQUILIBRIUM, EQUITIES, EQUITY PRICES, EXCHANGE RATE, EXPANSIONARY FISCAL POLICY, EXPECTED RETURNS, EXPENDITURE, EXPORTS, FAIR VALUE, FEDERAL RESERVE, FINANCIAL ASSETS, FINANCIAL CAPITAL, FINANCIAL CRISIS, FINANCIAL FLOWS, FINANCIAL INSTITUTIONS, FINANCIAL MARKETS, FINANCIAL REGULATION, FINANCIAL RISK, FINANCIAL SECTOR, FINANCIAL SHOCK, FINANCIAL STABILITY, FISCAL CONSOLIDATION, FISCAL DEFICIT, FISCAL DEFICITS, FISCAL POLICY, FORECASTS, FOREIGN BANK, FOREIGN CAPITAL, FOREIGN EXCHANGE, FREE BOND, FUTURE EARNINGS, FUTURE LABOR, GDP, GDP PER CAPITA, GENERAL EQUILIBRIUM, GLOBAL CAPITAL, GLOBAL CAPITAL FLOWS, GLOBAL ECONOMY, GLOBAL TRADE, GOVERNMENT BONDS, GOVERNMENT BORROWING, GOVERNMENT DEBT, GOVERNMENT DEFICITS, GOVERNMENT INVESTMENT, GOVERNMENT SPENDING, GROWTH RATE, GROWTH RATES, HOLDING, HOUSEHOLD INCOME, HOUSEHOLD WEALTH, HOUSING, HOUSING FINANCE, INCOME, INCOME EFFECT, INCOME ELASTICITY, INCOME TAX, INCOMES, INDUSTRIAL ECONOMIES, INFLATION, INFLATION RATE, INFRASTRUCTURE INVESTMENT, INFRASTRUCTURE PROJECTS, INSTRUMENT, INSURANCE, INTERNATIONAL BANK, INTERNATIONAL ECONOMICS, INTERNATIONAL INVESTORS, INTERNATIONAL TRADE, INVENTORIES, INVENTORY, INVESTING, INVESTMENT DECISION, INVESTMENT DECISIONS, INVESTMENT INCOME, LABOR MARKET, LAWS, LDCS, LEGISLATION, LENDERS, LEVEL OF INTEREST RATES, LIQUIDITY, LOAN, LOCAL GOVERNMENTS, LOSS OF CONFIDENCE, LOW INTEREST RATES, MACROECONOMIC ANALYSIS, MACROECONOMICS, MARGINAL PRODUCT, MARKET VALUATION, MARKET VALUE, MARKET VALUES, MINIMUM WAGE, MONETARY AUTHORITIES, MONETARY POLICY, MORTGAGE, MORTGAGE MARKET, MORTGAGE MARKETS, NET EXPORTS, NOMINAL INTEREST RATE, NOMINAL INTEREST RATES, OPEN ECONOMIES, OPTIMIZATION, OUTPUT GAP, PARTICULAR COUNTRY, PENSION, PENSION FUNDS, PERSONAL INCOME, POLICY RESPONSE, POLICY RESPONSES, POSITIVE EFFECTS, POTENTIAL OUTPUT, PRICE CHANGES, PRIVATE INVESTMENT, PRODUCTION FUNCTION, PRODUCTIVITY, PRODUCTIVITY GROWTH, PROTECTIONISM, PUBLIC POLICY, PUBLIC SPENDING, RAPID GROWTH, RATE OF RETURN, RATE OF RETURN TO CAPITAL, RATES OF INTEREST, RATES OF RETURN, REAL EXCHANGE RATE, REAL EXCHANGE RATES, REAL GDP, REAL INTEREST, REAL INTEREST RATE, REAL INTEREST RATES, RECESSION, REGULATORY OVERSIGHT, RESERVES, RISK PREMIUM, RISK PREMIUMS, RURAL INFRASTRUCTURE, SAVINGS, SEWAGE, SHORT TERM INTEREST RATES, SMALL INVESTORS, SOFT LOANS, STOCK MARKET, STOCK MARKETS, STOCKS, TAX, TAX BREAKS, TAX EXEMPTION, TAX RATES, TAX STRUCTURES, TELECOMMUNICATIONS, TRADE BALANCE, TRADE BALANCES, TRADE CREDIT, TRADE FINANCE, TRADE FLOWS, TRADE POLICY, TRADE PROTECTION, TRADES, TREASURIES, TREASURY, TREASURY BOND, TREASURY BOND YIELD, TRUSTEES, UNDERWRITERS, UNEMPLOYMENT, WAGE RIGIDITY, WEALTH, WEALTH EFFECTS, WORLD ECONOMIES, WORLD ECONOMY, WORLD FINANCIAL MARKETS, WORLD TRADE, WTO