The buildup in government debt in response to the “great recession,” has raised a number of policy dilemmas for individual countries as well as the world as a whole. The recent need for a change of fiscal policy stance has fuelled debates about the impact of fiscal consolidation on domestic...

This paper models the global financial crisis as a combination of shocks to global housing markets and sharp increases in risk premia of firms, households, and international investors; and finds that the shocks observed in financial markets can generate in the in the G-Cubed model (an...