The global financial crisis of 2008–09 led to massive interruptions in cross-border financial and trade flows. As a result of the crisis virtually all of the advanced economies and many emerging market countries experienced recessions over the past two years. These recessions coincided with various forms of financial disruptions such as severe contractions in the supply of credit and sharp declines in asset prices. Understanding the linkages between recessions and periods of financial disruptions has become a new challenge for macroeconomic research.