Understanding the global turmoil: It’s the general equilibrium, stupid

Ricardo Caballero 21 May 2010

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Here we go again. Financial volatility is re-emerging, this time from the other side of the ocean. But in the current globalised environment the ocean isn’t wide enough to contain the contagion and fear.

  • Will this rollercoaster ride end any time soon?
  • Do policymakers (and Congress in particular) have the right diagnosis so we can hope that a cure is around the corner?

I fear the answer to both is no.

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Topics:  Global crisis

Tags:  securitisation, global crisis, safe assets

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