Were Global Trade Imbalances the Main Cause of the 2008 Financial Crisis?

By Craig Tarasoff

As economists attempt to pinpoint the factors leading to the Financial Crisis, the answer may be found in an analysis of foreign trade. According to Martin Wolf, the chief economics commentator for the Financial Times and one of the world’s foremost writers on macroeconomics and international finance, the imbalance of global trade played a key role in deflating our country’s interest rates and put a strain on the housing and banking sectors. Read more about global trade imbalances at FiveThirtyEight, and be sure to take a look at Wolf’s new book, “The Shifts and the Shocks: What We’ve Learned — and Have Still to Learn — from the Financial Crisis.”