Global Financial Crisis in Retrospect (eBook)

Anthony Elson is an international economist, writer, and university lecturer in the Washington, DC, area. For a number of years, he was a senior staff member of the International Monetary Fund and consultant with the World Bank. He has also taught at the Duke Center for International Development, the Paul H. Nitze School for Advanced International Studies at Johns Hopkins University, and Yale University.

Preface and Acknowledgments 6
Previous Books by this Author 9
Contents 10
List of Charts 12
Chapter 1: Introduction 13
Summary and Conclusion 29
Notes 30
Chapter 2: The Financial Crisis of 2008–09: Fragile Banking, Economic Bust and Deflationary Consequences 31
The Ingredients of a Financial Crisis: What Was Unique and What Was Common? 32
The Pyramid of Risks Preceding the Global Financial Crisis 38
Financial and Real Economy Links in the Transition from Boom to Bust 47
Summary and Conclusion 52
Notes 53
Chapter 3: Why Did Economists Get It So Wrong? 56
The Neoclassical Synthesis/New Macroeconomic Consensus 58
The Efficient Market Hypothesis of Finance 70
The Modigliani-Miller Theorem 73
Summary and Conclusion 76
Notes 78
Chapter 4: The Challenge for Macroeconomic Policy in the Wake of the Crisis 81
The Nature of the Emergency Response 84
The Monetary and Fiscal Policy Response to Limit the Economic Effects of the Crisis 92
Assessing the Impact of the Government’s Policy to Promote Economic Recovery 104
The Future of Monetary Policy 111
Summary and Conclusion 113
Notes 115
Chapter 5: The Role of the International Financial Architecture Prior to and Since the Global Financial Crisis 122
What Is the International Financial Architecture (IFA)? 123
The Role of the IFA in the Lead-Up to the Global Financial Crisis 126
International Policy Coordination 126
Oversight of Global Financial Stability 129
International Financial Regulation 131
The International Lender of Last Resort (ILOLR) Mechanism 133
The Role of the IFA in the Wake of the Global Financial Crisis 135
The IFA and Crisis Financing 135
Setting the Policy Agenda 137
Initiating the Process of IFA Reform 140
IMF Involvement in the Euro Zone Crisis 142
Summary and Conclusion 150
Notes 152
Chapter 6: The Global Financial Crisis and Inequality 156
The Financial Sector and Income Inequality 157
Inequality and Mainstream Economics Prior to the Crisis 162
The Role of Inequality in Bringing About the Global Financial Crisis and the Impact of the Crisis on Income Inequality 165
The Impact of Financial Reform Measures on Income Inequality 169
Summary and Conclusion 174
Notes 175
Chapter 7: The Quest for Financial Stability at the National and Global Levels 178
The Oversight of Financial System Stability 178
Reform of the International Financial Architecture 188
Global Governance 189
International Policy Coordination 191
International Lender of Last Resort Mechanism 195
A Sovereign Debt-Restructuring Mechanism 197
Summary and Conclusion 199
Notes 200
Chapter 8: Toward a Rethinking of Macroeconomics 205
Does the Economy Conform to Keynesian or Neoclassical Principles? 206
Alternative Economic Visions of the World 215
How Has the Global Financial Crisis Influenced the Teaching of Economics? 221
Summary and Conclusion 224
Notes 225
Chapter 9: Conclusions and Lessons for the Future 229
The Financial Sector and Its Regulation 230
Monetary Policy 234
Fiscal Policy 238
The International  Financial Architecture 241
Thinking About the Aggregate Economy 245
Note 251
Index 252