1. How Do We Know This is Not Another Great Depression? Lessons for Policymakers from the 1930s
- Author:
- Jeffrey Frankel
- Publication Date:
- 07-2009
- Content Type:
- Policy Brief
- Institution:
- Belfer Center for Science and International Affairs, Harvard University
- Abstract:
- The current economic crisis is fundamentally different from those we have experienced in recent past. The proximate causes of previous recessions (1980-2 and 1990-91) were increases in interest rates in response to inflation. This time around, however, low interest rates and loose monetary policy during the period 2003-2005 had contributed to a bubble in asset prices, rather than to inflation. This-coupled with an underestimation of risk in our financial system, failures of corporate governance, and excessive debt by both households and government-caused the crisis of 2007-09.
- Topic:
- Economics, International Trade and Finance, Monetary Policy, and Financial Crisis
- Political Geography:
- United States, Japan, and Germany