The Financial Crisis: Origins and Implications

The 2008 financial crisis poses three fundamental questions for economists and policymakers; understanding the origins of the crisis, understanding the consequences of this crisis for the world economy, and finally understanding why the 2008 financial crisis is not as serious as the 1929 crisis. The prevailing view is that the 2008 financial crisis was solely the result of inadequate financial regulation together with a very loose monetary policy conducted by central banks, especially the Fed. It is believed that this crisis is a temporary detour in the normal course of the events, so that in the near future capitalist economies will resume the high growth path observed before the crisis. In terms of the third question, there is a widespread view that the fundamental reason that explains the avoidance of the harmful experiences of 1929 was the fiscal and monetary policy expansions in developed countries. No important role is assigned to developing countries in terms of the effects of the financial crisis.

This book challenges the prevailing orthodoxy surrounding the origins and the consequences of the 2008 financial crisis. The book demonstrates that measures in addition to a profound change in the financial regulation are required if a new financial crisis is to be avoided in the future. These measures include: a change in the conduct of economic policy; a reform of the national and international monetary systems; and a radical change in the pattern of income distribution.

This book is essential reading for all interested in macroeconomics, monetary policy, development economics and the global impact of the financial crisis.

Philip Arestis, Cambridge Centre for Economics and Public Policy, Department of Land Economy, University of Cambridge, UK. He is Professor of Economics, Department of Applied Economics V, Universidad del Pais Vasco, Spain; Distinguished Adjunct Professor of Economics, Department of Economics, University of Utah, US; Senior Scholar, Levy Economics Institute, New York, US; Visiting Professor, Leeds Business School, University of Leeds, UK; Professorial Research Associate, Department of Finance and Management Studies, School of Oriental and African Studies (SOAS), University of London, UK; and current holder of the British Hispanic Foundation `Queen Victoria Eugenia' British Hispanic Chair of Doctoral Studies. He is also Chief Academic Adviser to the UK Government Economic Service (GES) on Professional Developments in Economics.
Rogerio Sobreira is Associate Professor of Economics and Finance, Brazilian School of Public and Business Administration at Getulio Vargas Foundation and CNPq Researcher.
Jose Luis Oreiro is Associate Professor of Economics at the University of Brasilia (UnB), Level I Researcher at National Scientific Council (CNPq/Brazil), Director of the Brazilian Keynesian Association (AKB) and Member of the Editorial Board of Brazilian Journal of Political Economy (REP).