3. Post-Democracy and the Politics of Inequality: Explaining Policy Responses to the Financial Crisis and the Great Recession

2017 ◽  
pp. 44-73
Keyword(s):  
Financial Crisis ◽  
Great Recession ◽  
The Great Recession ◽  
Policy Responses

The Great Financial Crisis: an Ethical Rejoinder

2012 ◽  
Vol 33 (01) ◽  
pp. 19-32 ◽  
Author(s):  
David Charles Merrill
Keyword(s):  
Financial Crisis ◽  
Market Economy ◽  
Great Recession ◽  
Ethical Question ◽  
Heterodox Economics ◽  
Ethical Philosophy ◽  
The Great Recession ◽  
The Past ◽  
Modern Economy ◽  
Radical Reconstruction

The Great Financial Crisis that broke in 2008 and the Great Recession that followed has led many to question the very structure of contemporary economies. Some argue that the economic model of the past forty years is now broken. Criticism has also been directed at the orthodoxies of economics. For example, neoclassical equilibrium economics, the mainstream economics of the day, is accused of failing to understand some of the most basic aspects of the modern economy (debt and money), of supporting policies that have led to the economic breakdown (deregulation), and of failing to see the crisis coming (Bezemer 2012, Keen 2011). Consequently, heterodox thinking in economics is getting a hearing as never before. Heterodox economics offers itself as the requisite radical reconstruction of the science of economics and also proposes policies for the radical reconstruction of the major economics.Yet to talk of the reconstruction of the modern market economy is at the same time to raise the ethical question: what shape ought the market economy to take? Heterodox economics may acutely analyse the inadequacies of real economies and propose plausible reforms, but as an essentially descriptive science there will be limits on its ability to state what ought to be. Rather, what is required seems to be a systematic prescriptive ethics. In other words, recent events in the world of economics have provided an opening for what ethical philosophy should be best at providing. Determining whether a specific ethical philosophy, to be identified shortly, has the capacity to address the questions raised by heterodox economics is the task of this paper.

Are Busy Directors Harmful or Helpful? Evidence from the Great Recession

2018 ◽  
Vol 18 (2) ◽  
Author(s):  
Pradit Withisuphakorn ◽  
Pornsit Jiraporn
Keyword(s):  
Standard Deviation ◽  
Financial Crisis ◽  
Great Recession ◽  
Firm Value ◽  
Costs And Benefits ◽  
Governance Mechanisms ◽  
Great Caution ◽  
Crisis Period ◽  
The Great Recession

Abstract We contribute to the debate on the costs and benefits of busy directors by investigating the effect of busy directors on firm value during a stressful time, i. e. during the Great Recession. Our results show that busy directors improve firm value significantly during the financial crisis. In particular, a rise in directors’ busyness by one standard deviation results in an improvement in Tobin’s q by 6.41 %. Directors with multiple board seats appear to help firms navigate the crisis more successfully, supporting the notion that multiple board seats signal higher quality. Outside the crisis period, however, we find that busy directors reduce firm value, consistent with many prior studies. Our results are crucial as they show that governance mechanisms function differently during stressful times than they do during normal times. Firms should exercise great caution before imposing limits on outside board seats on their directors.

scholarly journals Financial shocks and inflation dynamics

2021 ◽  
pp. 1-29
Author(s):  
Angela Abbate ◽  
Sandra Eickmeier ◽  
Esteban Prieto
Keyword(s):  
Financial Crisis ◽  
Great Recession ◽  
Policy Implication ◽  
Vector Autoregressive Model ◽  
Financial Shocks ◽  
Trade Off ◽  
Vector Autoregressive ◽  
The Great Recession ◽  
Short Run ◽  
Dual Mandate

Abstract We assess the effects of financial shocks on inflation, and to what extent financial shocks can account for the “missing disinflation” during the Great Recession. We apply a Bayesian vector autoregressive model to US data and identify financial shocks through a combination of narrative and short-run sign restrictions. Our main finding is that contractionary financial shocks temporarily increase inflation. This result withstands a large battery of robustness checks. Negative financial shocks help therefore to explain why inflation did not drop more sharply in the aftermath of the financial crisis. Our analysis suggests that higher borrowing costs after negative financial shocks can account for the modest decrease in inflation after the financial crisis. A policy implication is that financial shocks act as supply-type shocks, moving output and inflation in opposite directions, thereby worsening the trade-off for a central bank with a dual mandate.

The ongoing aftermath to the financial crisis and the Great Recession

2019 ◽  
Vol 34 (5) ◽  
pp. 560-570
Author(s):  
Gerardo del Cerro Santamaría
Keyword(s):  
Financial Crisis ◽  
Great Recession ◽  
Liberal Democracy ◽  
The United States ◽  
Historical Period ◽  
Current Crisis ◽  
The West ◽  
The Great Recession ◽  
Contemporary World ◽  
The World

This article discusses the consequences of the financial crisis that started in 2008 in the West, and particularly in the United States, as a manifestation of neoliberal capitalism’s multiple failures. In doing so, it focuses on the scholarly contributions of Manuel Castells and his colleagues in two important books: Aftermath: The Cultures of the Economic Crisis (2012) and Another Economy is Possible (2017). Both books are collective works led and edited by Castells. Also included in the review is a third book by Castells, Rupture: The Crisis of Liberal Democracy (2018), which can be read as a statement on some of the political consequences of the 2008 financial crisis and a report on the current crisis of liberal democracy. The contention is that Castells et al. make an important contribution to the socio-economic literature on the financial crisis, its consequences, and the interpretation of the societal changes that ensued and are key to understand our contemporary world. Such contribution, as observed in the three books under review, can be summarized as follows: (1) Castells and colleagues provide cases and examples from around the world in a broad comparative fashion, thus expanding our understanding of a crisis that was essentially a crisis of the West with ramifications in other countries but never a truly global crisis. (2) The approach of Castells and his colleagues is interdisciplinary and goes beyond purely economic arguments to include sociological, political and cultural ideas and insights that help us understand the complexity of the historical period under analysis; readers develop an awareness of the systemic character of the crisis, where all events were closely interrelated; in particular, both micro and macro processes leading to the crisis converged into a mutually dialectical and reinforcing relationship that warrants the contention by the authors that ‘economies’ are ‘cultures.’ (3) The authors in both Aftermath and Another Economy is Possible focus on the (long) aftermath of the crisis, which is still ongoing as of September 2019 around the world; in fact, one of Castells’ main points is that the financial crisis brought about irreversible societal change, ongoing and clearly visible today, as it triggered a significant restructuring of global informational capitalism. (4) The authors provide a focus on one of the reactive consequences of the crisis: alternative economic practices developing in the aftermath of the crisis, under the premise that we might be witnessing the rise of a new economic model based on new, alternative values. (5) Castells provides a discussion (in Rupture) of aspects of the contemporary political landscape a decade after the outset of the financial crisis and the Great Recession.

scholarly journals Recovering from The Great Recession: A Comparative Analysis of the Nature and Effectiveness of Global Reactionary Policy to the 2008 Financial Crisis

2016 ◽  
Vol 1 (2) ◽  
pp. 87-90
Author(s):  
Evan Truscott
Keyword(s):  
Financial Crisis ◽  
Great Recession ◽  
Large Scale ◽  
Economic Recession ◽  
Time Frame ◽  
Small Time ◽  
Global Trends ◽  
The Great Recession ◽  
Effective Policy ◽  
The 2008 Financial Crisis

The 2008 'subprime' financial crisis caused intense economic recession and instability on an international scale, creating the need for immediate reactionary and interventionist policy from most governments. With a wealth of large-scale dedicated studies to this specific topic emerging in recent years, we have a unique opportunity to synthesize these findings in a way that could indicate potential effective policy actions. This paper intends to identify, categorize and compare an array of policies enacted by utilizing a specific cross section of nations similar in political culture (Australia, New Zealand, and Canada), in an attempt to broadly asses and isolate global trends of reactionary policy-making and the effectiveness of these policies, in nations of comparable institutions, over a relatively small time frame.

scholarly journals Deleveraging and Monetary Policy: Japan Since the 1990s and the United States Since 2007

2012 ◽  
Vol 26 (3) ◽  
pp. 177-202 ◽  
Author(s):  
Kazuo Ueda
Keyword(s):  
United States ◽  
Monetary Policy ◽  
Great Recession ◽  
Federal Reserve ◽  
The United States ◽  
Federal Funds ◽  
Federal Funds Rate ◽  
The Great Recession ◽  
Policy Responses ◽  
The U.S

As the U.S. economy works through a sluggish recovery several years after the Great Recession technically came to an end in June 2009, it can only look with horror toward Japan's experience of two decades of stagnant growth since the early 1990s. In contrast to Japan, U.S. policy authorities responded to the financial crisis since 2007 more quickly. Surely, they learned from Japan's experience. I will begin by describing how Japan's economic situation unfolded in the early 1990s and offering some comparisons with how the Great Recession unfolded in the U.S. economy. I then turn to the Bank of Japan's policy responses to the crisis and again offer some comparisons to the Federal Reserve. I will discuss the use of both the conventional interest rate tool—the federal funds rate in the United States, and the “call rate” in Japan—and nonconventional measures of monetary policy and consider their effectiveness in the context of the rest of the financial system.

scholarly journals On DSGE Models

2018 ◽  
Vol 32 (3) ◽  
pp. 113-140 ◽  
Author(s):  
Lawrence J. Christiano ◽  
Martin S. Eichenbaum ◽  
Mathias Trabandt
Keyword(s):  
Financial Crisis ◽  
General Equilibrium ◽  
Policy Change ◽  
Great Recession ◽  
Relative Strength ◽  
Dynamic Stochastic General Equilibrium ◽  
Dsge Models ◽  
The Great Recession ◽  
Dynamic Stochastic ◽  
Different Parts

The outcome of any important macroeconomic policy change is the net effect of forces operating on different parts of the economy. A central challenge facing policymakers is how to assess the relative strength of those forces. Economists have a range of tools that can be used to make such assessments. Dynamic stochastic general equilibrium (DSGE) models are the leading tool for making such assessments in an open and transparent manner. We review the state of mainstream DSGE models before the financial crisis and the Great Recession. We then describe how DSGE models are estimated and evaluated. We address the question of why DSGE modelers—like most other economists and policymakers—failed to predict the financial crisis and the Great Recession, and how DSGE modelers responded to the financial crisis and its aftermath. We discuss how current DSGE models are actually used by policymakers. We then provide a brief response to some criticisms of DSGE models, with special emphasis on criticism by Joseph Stiglitz, and offer some concluding remarks.

scholarly journals Moving Beyond the Great Recession: Innovative Programmatic and Policy Responses to Poverty

2015 ◽  
Vol 23 (3-4) ◽  
pp. 311-322 ◽  
Author(s):  
Kelly Patterson ◽  
Robert Silverman ◽  
Anna Maria Santiago
Keyword(s):  
Great Recession ◽  
The Great Recession ◽  
Policy Responses
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