Please use this identifier to cite or link to this item: http://hdl.handle.net/10419/93636
Authors: 
Justiniano, Alejandro
Primiceri, Giorgio E.
Tambalotti, Andrea
Year of Publication: 
2013
Series/Report no.: 
Staff Report, Federal Reserve Bank of New York 648
Abstract: 
We use a quantitative equilibrium model with houses, collateralized debt, and foreign borrowing to study the impact of global imbalances on the U.S. economy in the 2000s. Our results suggest that the dynamics of foreign capital flows account for between one-fourth and one-third of the increase in U.S. house prices and household debt that preceded the financial crisis. The key to these findings is that the model generates the sustained low level of interest rates observed over that period.
Subjects: 
U.S. trade deficit
household debt
JEL: 
E27
F32
F41
F47
Document Type: 
Working Paper

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