Globalisation, the financial crisis and stabilisation policies
- 1 juli 2009
- Torben M. Andersen, Peter Englund and Stefan Gerla
Underlagsrapport 36: på engelska
The financial crisis, initially limited to the US housing market, has turned into a world-wide economic crisis. Business cycle forecasts have continuously being revised downwards. Negative growth rates and soaring unemployment rates are expected for almost all OECD countries. As a response to the crisis, monetary policy has been radically eased, including both provisions of liquidity and significant interest rate reductions. Fiscal policy measures have also been implemented, albeit the extent and design have differed between countries. The global downturn has initiated a discussion concerning the need to redesign and globally coordinate stabilisation policies. But what role can stabilization policy - fiscal and monetary policy - play in the current situation? And to what extent is globalisation the cause of the current global turmoil? In "Globalisation, the financial crisis and stabilization policies. Challenges for the future" three professors of economics discuss the current financial crisis and the need and scope for monetary and fiscal policy. The report also analyses what mechanisms gave rise to the world-wide crisis and what reforms to financial regulation are needed in order to minimize the chances of similar crises in the future.