scholarly journals ENTREPRENEURS, FINANCIERS, AND BOOM–BUST CYCLES

2016 ◽  
Vol 21 (3) ◽  
pp. 785-816 ◽  
Author(s):  
Takuma Kunieda ◽  
Akihisa Shibata
Keyword(s):  
Great Recession ◽  
Productivity Growth ◽  
Financial Crises ◽  
High Growth ◽  
Factor Productivity ◽  
Business Cycle Theory ◽  
The Great Recession ◽  
Dynamic General Equilibrium Model ◽  
Parameter Values ◽  
Financial Market Imperfections

In this paper, a dynamic general equilibrium model with infinitely lived entrepreneurs and financiers is developed to investigate a possible mechanism that explains business cycles and financial crises. The highest growth rate is achievable only if financiers coexist with entrepreneurs, given a certain extent of financial market imperfections. However, if financiers coexist with entrepreneurs, the economy is highly likely to face a financial crisis at certain parameter values. These two-sided implications of the coexistence of entrepreneurs and financiers explain why both instability and high growth are frequently observed in modern economies. Furthermore, our model can obtain countercyclical movements in total factor productivity growth that cannot be explained by the standard real business cycle theory but were observed in the Great Recession of 2007–2008.

scholarly journals Hall of Mirrors: The Great Depression, the Great Recession, and the Uses—and Misuses—of History

2015 ◽  
Vol 89 (3) ◽  
pp. 557-569 ◽  
Author(s):  
Per H. Hansen
Keyword(s):  
United States ◽  
Great Depression ◽  
Great Recession ◽  
Financial Crises ◽  
The United States ◽  
Comparative Approach ◽  
The Great Recession ◽  
The Great Depression ◽  
Successful Search ◽  
Similarities And Differences

Barry Eichengreen's new bookHall of Mirrorsis a detailed, excellent, and somewhat pessimistic comparison of the two most serious financial crises ever—their causes, development, and consequences. Readers well versed in the comprehensive literature on the Great Depression and the Great Recession in the United States and Europe will not find much information inHall of Mirrorsthat is completely new, but most others will. Whatisnew is the comparative approach: the detailed and analytically successful search for similarities and differences between the Great Depression and the Great Recession.

scholarly journals Capital Adequacy and Liquidity of Global Financial Institutions: A Study of Reforms after the Great Recession

2019 ◽  
Vol 5 (4) ◽  
pp. p419
Author(s):  
Mehdi Monadjemi ◽  
John Lodewijks
Keyword(s):  
Financial Institutions ◽  
Great Recession ◽  
Federal Reserve ◽  
Financial Crises ◽  
Central Banks ◽  
Capital Adequacy ◽  
Federal Reserve Bank ◽  
The Great Recession ◽  
The Great Depression ◽  
Reserve Bank

The global financial crises of 2007-2009 was followed by the Great Recession which was the worst since the Great Depression of 1930s. The crises left significant adverse effects on global growth and employment. Policymakers of affected countries responded differently to the outcomes of these crises. The central banks, including US Federal Reserve Bank and Bank of England, provided ample liquidity for the financial institutions and lowered the interest rate to near zero. The policymakers and regulators realized that capital inadequacy and insufficient liquidity of financial institutions were the main problems preventing the financial firms to protect themselves against major financial crises. In addition, lack of guidelines for compensations encourages managers to take the extra risks. The US Federal Reserve Bank took the initiative, in cooperation with international central banks to introduce rules and regulations to safeguard the financial systems against another major crisis. It is not guaranteed that another episode of financial instability will not happen again. However, with existing regulations on financial institutions in force, the severity of the crises on the whole global financial system may possibly become weaker. This is a conjecture we explore here.

In the current stream

2021 ◽  
pp. 309-345
Author(s):  
Michael Peneder ◽  
Andreas Resch
Keyword(s):  
Economic Theory ◽  
Venture Capital ◽  
Central Bank ◽  
Great Recession ◽  
Economic History ◽  
Financial Crises ◽  
The Great Recession ◽  
Hyman Minsky ◽  
Intellectual Environment

While the previous chapter highlighted the resurgence of Schumpeter’s concept of money in economic theory, this chapter focuses on three examples from recent economic history in which the interdependence of finance and innovation invokes a deliberate Schumpeterian interpretation. The first example is about the striking rise of modern venture capital in Schumpeter’s immediate geographical and intellectual environment during his years at Harvard, to which he contributed a consistent intellectual frame (also through his personal ties with people like David Rockefeller, Frank Taussig, or George Doriot). The second example addresses the recurrent instances of financial crises, in particular the Great Recession of 2008-09, and invokes a Schumpeterian interpretation mainly via the instability theorem of his student Hyman Minsky. Finally, we turn to the stream of innovations that relate to the increasing digitalisation of money ranging from cryptocoins to central bank digital currencies (CBDC).

scholarly journals Understanding the Great Recession

2015 ◽  
Vol 7 (1) ◽  
pp. 110-167 ◽  
Author(s):  
Lawrence J. Christiano ◽  
Martin S. Eichenbaum ◽  
Mathias Trabandt
Keyword(s):  
Great Recession ◽  
Economic Activity ◽  
New Keynesian ◽  
Factor Productivity ◽  
Working Capital ◽  
The Great Recession ◽  
Keynesian Model ◽  
Price Rigidities ◽  
The Cost ◽  
Joint Behavior

We argue that the vast bulk of movements in aggregate real economic activity during the Great Recession were due to financial frictions. We reach this conclusion by looking through the lens of an estimated New Keynesian model in which firms face moderate degrees of price rigidities, no nominal rigidities in wages, and a binding zero lower bound constraint on the nominal interest rate. Our model does a good job of accounting for the joint behavior of labor and goods markets, as well as inflation, during the Great Recession. According to the model the observed fall in total factor productivity and the rise in the cost of working capital played critical roles in accounting for the small drop in inflation that occurred during the Great Recession. (JEL E12, E23, E24, E31, E32, E52)

scholarly journals Evolution of Modern Business Cycle Models: Accounting for the Great Recession

2018 ◽  
Vol 32 (3) ◽  
pp. 141-166 ◽  
Author(s):  
Patrick J. Kehoe ◽  
Virgiliu Midrigan ◽  
Elena Pastorino
Keyword(s):  
Business Cycle ◽  
Great Recession ◽  
The United States ◽  
Dsge Models ◽  
Real Business Cycle ◽  
Business Cycle Theory ◽  
The Great Recession ◽  
Modern Business ◽  
Dynamic Stochastic ◽  
The Rich

Modern business cycle theory focuses on the study of dynamic stochastic general equilibrium (DSGE) models that generate aggregate fluctuations similar to those experienced by actual economies. We discuss how these modern business cycle models have evolved across three generations, from their roots in the early real business cycle models of the late 1970s through the turmoil of the Great Recession four decades later. The first generation models were real (that is, without a monetary sector) business cycle models that primarily explored whether a small number of shocks, often one or two, could generate fluctuations similar to those observed in aggregate variables such as output, consumption, investment, and hours. These basic models disciplined their key parameters with micro evidence and were remarkably successful in matching these aggregate variables. A second generation of these models incorporated frictions such as sticky prices and wages; these models were primarily developed to be used in central banks for short-term forecasting purposes and for performing counterfactual policy experiments. A third generation of business cycle models incorporate the rich heterogeneity of patterns from the micro data. A defining characteristic of these models is not the heterogeneity among model agents they accommodate nor the micro-level evidence they rely on (although both are common), but rather the insistence that any new parameters or feature included be explicitly disciplined by direct evidence. We show how two versions of this latest generation of modern business cycle models, which are real business cycle models with frictions in labor and financial markets, can account, respectively, for the aggregate and the cross-regional fluctuations observed in the United States during the Great Recession.

scholarly journals PROSPERITY FOR ALL: AN ASSESSMENT OF THE “FARMERIAN” REMEDIES TO PREVENT FINANCIAL CRISES AND REDUCE UNEMPLOYMENT

2017 ◽  
Vol 23 (3) ◽  
pp. 1287-1293
Author(s):  
Marco Guerrazzi
Keyword(s):  
Great Recession ◽  
Financial Crises ◽  
Research Agenda ◽  
New Keynesian ◽  
Recent Book ◽  
Policy Issues ◽  
The Great Recession

In a recent book, Roger Farmer offers a quick but exhaustive rundown of the research agenda that he drove forward over the last 10 years with the aim to offer a novel microfoundation for Keynesian macroeconomics and—as a by-product—providing practical remedies to prevent financial crises, reduce unemployment, and ensure prosperity for all. In that work, the Farmerian arguments question the conventional visions underlying the Neo-Classical and New Keynesian paradigms and the addressed topics cover relevant theoretical, empirical, and policy issues that have been widely debated after the Great Recession of 2007–2009.

Government Responses to the Great Recession

2019 ◽  
pp. 59-80
Author(s):  
Agnar Freyr Helgason
Keyword(s):  
Economic Growth ◽  
Fiscal Policy ◽  
Current Account ◽  
Great Recession ◽  
Financial Crises ◽  
Social Protection ◽  
The Great Recession ◽  
Policy Measures ◽  
Current Account Balances ◽  
Automatic Stabilizers

In this chapter Agnar Freyr Helgason focuses on the statistical profiles of government policies and outcomes after the crisis hit. The Great Recession is placed in the context of longer-term developments of financial crises. The economic growth context is outlined, as are current account balances and debt levels leading up to the crisis. The chapter also focuses on what fiscal policy measures affecting population welfare (automatic stabilizers versus discretionary measures) governments put in place. The extent of stimulus, austerity, taxation and transfers, and other social protection efforts are considered in turn. These three chapters making up Part I, as well as the Introduction, set the scene for the more detailed country case studies in Part II, by providing understanding of governments’ options and comparative perspectives and showing how populations were differentially affected.

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