We present empirical evidence that the marked rise in liquidity in 2001-2007 was due to large and persistent current account deficits and loose monetary policy. If this increase in liquidity was a pre-condition for the financial crisis that began in July 2007, we can conclude that loose monetary and the deterioration in current account balances were causes of the financial crisis.
|Place of Publication
|Bath, U. K.
|Department of Economics, University of Bath
|Published - 2009
|Bath Economics Research Working Papers
- monetary policy
- financial crisis
- global imbalances