the U.S. would experience a sudden stop of capital flows, which would unavoidably drag the world economy into a deep … instead that the root imbalance was of a different kind: The entire world had an insatiable demand for safe debt instruments … of exposing the economy to a systemic panic. This structural problem can be alleviated if governments around the world …

-movements of global factors in asset prices and capital flows with commodity prices, international trade and world output as well … as the sensitivity of different parts of the world to the Global Financial Cycle. We present evidence of the causal …