Changing fortunes. How China's boom caused the financial crises

H (Heleen) Mees

Research output: Types of ThesisDoctoral ThesisExternally prepared


Since the financial crisis in 2008 and the ensuing economic recession that rocked the world economy, plenty of blame has been going around. The chairman of the U.S. Federal Reserve, Ben Bernanke, specifically singled out subprime mortgages and the Wall Street bankers that sold those mortgages. In bureaucratic jargon it is often dubbed a regulatory oversight failure. This study, however, shows that the Federal Reserve¿s loose monetary policy at the start of the new millennium triggered the U.S. refinancing boom in 2003 and 2004, spurring personal consumption expenditures through home equity extraction. The U.S. spending binge boosted economic growth and savings in China and oil-exporting nations. The build-up of savings in China, which are heavily skewed towards fixed income assets, depressed interest rates worldwide from 2004 on. The decline in long-term interest rates accounts for the U.S. housing boom. Despite popular belief, the proliferation of exotic mortgage products can hardly be faulted for the U.S. housing boom and eventual bust.
Original languageEnglish
Awarding Institution
  • Erasmus University Rotterdam
  • Franses, Philip Hans, Supervisor
  • Bekaert, Doctoral committee member
  • de Vries, Casper, Doctoral committee member
Award date28 Aug 2012
Place of PublicationRotterdam
Print ISBNs9789058923110
Publication statusPublished - 28 Aug 2012

Research programs

  • ESE - MKT
  • EUR ESE 01


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