Paul Krugman: A serious paper on the crisis

[Kurt_and_Hunter]

Serious economist stuff with lots of equations and charts and squiggly lines

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The International Finance Multiplier

Paul Krugman October 2008

1. Introduction

The current financial crisis is remarkable in many ways, but one aspect is of special interest for international economists: even though the roots of the crisis lie in the U.S. housing market, the crisis is now very much a global affair. Figure 1 shows the decline in a number of stock market induces over the year ending October 4, 2008; essentially, all markets fell by the same amount. The freeze on interbank lending and in the commercial paper market is affecting Europe to much the same degree that it’s affecting the United States, with the gap between Euro and the Rep rate similar to that between Labor and the Fed funds rate. Banks are failing, or needing urgent government rescue, on both sides of the Atlantic...

PDF FORMAT

http://www.princeton.edu/~pkrugman/finmult.pdf