Financial Crash, Commodity Prices, and Global Imbalances
- 1 September 2008
- journal article
- research article
- Published by Project MUSE in Brookings Papers on Economic Activity
- Vol. 2008 (2), 1-55
- https://doi.org/10.1353/eca.0.0013
Abstract
The current financial crisis has its origins in global asset scarcity, which led to large capital flows toward the United States and to the creation of asset bubbles that eventually burst. In its first phase the crash exacerbated the shortage of assets in the world economy, which triggered a partial re-creation of the bubble in commodities markets, and oil markets in particular. This bubble in turn led to an increase in petrodollars seeking financial assets in the United States, which became a source of stability for the U.S. external balance. The second phase of the crisis is more conventional and began to emerge in the summer of 2008, when it became apparent that the financial crisis would permeate the real economy and sharply slow global growth. This slowdown worked to reverse the tight commodity market conditions required for a bubble to develop, ultimately destroying the commodity bubble.Keywords
Other Versions
This publication has 7 references indexed in Scilit:
- Substitution and price elasticity estimates using inter-country pooled data in a translog cost modelEnergy Economics, 2006
- An Equilibrium Model of Global Imbalances and Low Interest RatesSSRN Electronic Journal, 2006
- International Investors, the U.S. Current Account, and the DollarBrookings Papers on Economic Activity, 2005
- The Asymmetric Effects of Changes in Price and Income on Energy and Oil DemandThe Energy Journal, 2002
- Analysing gasoline demand elasticities: a surveyEnergy Economics, 1991
- Oil and Economic Performance in Industrial CountriesBrookings Papers on Economic Activity, 1980
- The Economics of Exhaustible ResourcesJournal of Political Economy, 1931