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.

Banking in Australia and New Zealand—Geographic Proximity, Market Concentration, and Banking Integration

2019 ◽  
pp. 1189-1213
Author(s):  
Fariborz Moshirian ◽  
Eliza Wu
Keyword(s):  
New Zealand ◽  
Financial Crisis ◽  
Great Recession ◽  
Global Financial Crisis ◽  
Banking Industry ◽  
Banking System ◽  
Geographic Proximity ◽  
The Great Recession ◽  
The Past ◽  
Global Banks

This chapter focuses on the Australian and New Zealand (NZ) banking industry. Australian and New Zealand banks have undergone significant growth and challenges in the past decade. Australian banks weathered the Great Recession from 2008 and still recorded strong profits and minimal losses while other global banks failed internationally. To understand why this might be, we examine the composition of the closely integrated banking sectors in Australia and NZ, their respective performance, capital levels, and some defining regulatory reforms that have particularly shaped the Australian banking system since the 2008 Global Financial Crisis.

A Long Stagnation, or Capitalism without Growth

2018 ◽  
Author(s):  
Louçã Francisco ◽  
Ash Michael
Keyword(s):  
Great Recession ◽  
World Economy ◽  
Economic Stability ◽  
Secular Stagnation ◽  
The Great Recession ◽  
The Past ◽  
The World ◽  
History Of ◽  
Growth Prospects

Chapter 11 assesses the growth prospects of the world economy. The history of global economic doomsaying is traced briefly, a frequently reasonable position that has not done well with the facts for the past hundred years. Capitalism has been adept at escaping from the pit and pendulum. A set of global imbalances is then reviewed that are seen as posing a severe threat to global economic stability and certainly to the prospects for sustainable and equitable growth. The Great Recession following the Crash of 2007–8 might be “different this time.” Historical and contemporary fears of “secular stagnation” are discussed but the speculative nature of stagnationist assessments is acknowledged.

Shock or Design: What Drives Fiscal De/Centralization? A Comparative Analysis of Twenty-Nine OECD Countries, 1995–2017

2020 ◽  
Vol 51 (1) ◽  
pp. 1-26
Author(s):  
Tobias Arnold ◽  
Sean Mueller ◽  
Adrian Vatter
Keyword(s):  
Crisis Management ◽  
Great Recession ◽  
Political System ◽  
Multidimensional Approach ◽  
New Paradigm ◽  
The Great Recession ◽  
The Past ◽  
Fiscal Centralization ◽  
The Impact ◽  
Active Policy

Abstract Over the past decades, decentralization has become the new paradigm in how states should organize power territorially. Carefully planned institutional re-designs are the most visible expression thereof. Yet the Great Recession of 2007–2009 has pushed governments into the opposite direction, i.e., towards centralization, to better weather the fiscal drought. Given these contradictory developments, this article compares the effects of twenty-three separate state reforms with the impact of the Great Recession on fiscal centralization in twenty-nine countries over more than two decades. In the main, our analyses attribute a larger effect to design, i.e., pro-active policy making through reforms, than reactive crisis management after a great shock. However, this difference is only apparent once we consider a state’s institutional structure, that is whether a political system is unitary or federal. Our findings thus highlight the need for a multidimensional approach to better understand the drivers of fiscal de/centralization.

The Great Depression and the Great Recession in Interwar Greece and Today: A comparison

2015 ◽  
Vol 66 (2) ◽  
Author(s):  
Sophia Lazaretou
Keyword(s):  
Great Recession ◽  
Empirical Studies ◽  
Economic Downturn ◽  
The Great Recession ◽  
The Past ◽  
Greek Crisis ◽  
The Great Depression ◽  
Terra Incognita ◽  
Cross Country ◽  
Nominal Anchor

AbstractThe past Greek crisis experience is more or less terra incognita. In all historical empirical studies Greece is systematically neglected or included only sporadically in their cross-country samples. In the national literature too there is little on this topic. In this paper we use the 1930s crisis as a useful testing ground to compare the two crises episodes, ‘then’ and ‘now’; to detect differences and similarities and discuss the policy facts with the ultimate aim to draw some ‘policy lessons’ from history. To the best of our knowledge, this is the first attempt to study the Greek crisis experience across the two historical episodes. Comparisons with the interwar period show that the recent economic downturn was faster, larger and more severe than during the early 1930s. More importantly, analysing the determinants of the two crises, we conclude that Greece’s problems arose from its inability to credibly adhere to a nominal anchor.

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 Role of Policy in the Great Recession and the Weak Recovery

2014 ◽  
Vol 104 (5) ◽  
pp. 61-66 ◽  
Author(s):  
John B. Taylor
Keyword(s):  
Economic Performance ◽  
Great Recession ◽  
Regulatory Policy ◽  
Poor Performance ◽  
Economic Policies ◽  
Slow Recovery ◽  
The Great Recession ◽  
The Past ◽  
Severe Recession

This paper reports on recent research showing that the severe recession of 2007-2009 and the weak recovery have been due to poor economic policies and the failure to implement good policies during the past decade. Monetary policy, fiscal policy, and regulatory policy became more discretionary, more interventionist, and less predictable in comparison with the previous two decades of better economic performance. At best these policies led to growth spurts, but were followed by retrenchments, averaging to poor performance. The paper also considers alternative views-that the equilibrium interest rate declined during the decade and that the seriousness of financial crisis caused the slow recovery.

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.

PROJECTIONS ONTO THE PAST: MEMORIES OF DEMOCRATIZATION IN SPAIN, GREECE, AND PORTUGAL DURING THE GREAT RECESSION*

2019 ◽  
Vol 24 (4) ◽  
pp. 511-524 ◽  
Author(s):  
Kostis Kornetis
Keyword(s):  
Great Recession ◽  
Public Discourse ◽  
The Political ◽  
Oral Histories ◽  
The Great Recession ◽  
The Past ◽  
Contemporary Politics ◽  
Younger Generation

This article engages the argument that the 2008–2009 Great Recession forced a revisiting of the period of transitions in Spain, Greece, and Portugal as “political masterpieces,” especially among a younger generation of activists. It argues that this radical reevaluation turned the conflicting generational recollections of the past into pivotal components of present political contestation. Moreover, it shows how the redeeming power of the transitions animates the political, cultural, and public discourse of young politicized people who, although (or precisely because) they have not experienced these events directly, keep returning to them to make sense of contemporary politics. The complex relations between past and present are analyzed using oral histories with the so-called Generation 2 of the transitions, namely people who have only “projective memories” of these events during the 1970. Especially relevant is the effects of their participation in the 2011 indignados movements.

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