The International Monetary Fund and the global economic crisis, 2008–2009

Abstract

Thanks to transmission mechanisms, the severe financial crisis that broke out in the United States in 2007–2008 became global almost immediately. As the disappearance of immense amounts of virtual money dried out international financial markets, the global liquidity crisis promptly turned into a global credit crunch, triggering an immediate recession in sectors like the construction and the auto industries where products are mainly (or almost exclusively) purchased on credit. In combination with the credit crisis, the severe setback in specific industries first pushed the US economy into crisis and then dragged the vast majority of the global economy into recession.