beyond as a global phenomenon. Some have argued that this global recession has a common source: the U.S. financial crisis …, whereas the resulting recession in the economy of its trading partner is quantitatively minor. Transmission through goods … trade is limited by the calibrated average trade share, which we find insufficient to deliver a sizable recession abroad …

but this effect subsides and then triggers a prolonged recession. In the base model, a decomposition of U.S. output growth … important contributors to the output gap during the Great Recession …