�The authors want to thank very specially CERES’s research assistants—Federico Bermúdez, Santiago García

Xavier—for their excellent work and for their unconditional dedication and support. The New Global Economic Geography: The World Economy in the Aftermath of the Global Financial Crisis Nothing could be more appropriate than the epigram by the formidable Irish playwright Oscar Wilde to describe the state of world affairs in the aftermath of the global financial crisis: “Truth is rarely pure and never simple. ” In fact, it is fair to assert that the global financial crisis has created a “new global economic geography,” a new reality that responds to the remarkable fact that the crisis that crippled the advanced economies has nevertheless also left winners around the globe. Let us illustrate this intriguing phenomenon of the post-financial crisis world, starting where it all began: the U.S. economy. The picture that emerges from figure 1 illustrates the devastating effects of the financial crisis: a severe credit crunch that came hand-in-hand with an equally severe contraction in output that still remains significantly below precrisis trends and persistently high levels of unemployment. 1 The dynamics of the Great Recession differ markedly from post-World War II recessions in many dimensions. First, the Great Recession was deeper and longer than any other post-World War II recession; that is, output declined by 5 percent peak to trough for six