The Financial Crisis of 2007-2008 and its Macroeconomic Consequences

  title={The Financial Crisis of 2007-2008 and its Macroeconomic Consequences},
  author={J. E. Stiglitz},
Information and incentive problems played important roles in the financial market scandals of the late 90s (exemplified by Enron/Worldcom) and in the financial crisis of 2007/2008. In my book Roaring Nineties, I provide an interpretation of the market scandals of the late nineties and early years of this century. Here, I want to provide a similar interpretation of the 2007/2008 crisis and a critique of the policy responses. The analysis here is motivated in part by observations of a large… 

Turkey: In the Midst of Crisis, Between Liberal Utopia and Keynesian Regulation

As Turkey’s growth numbers signalled negative news about the near future, possible economic remedies  to solve an upcoming economic slowdown have been discussed. In this article by looking at the


As experts discuss the causes and results of the 2008 financial crisis and ensuing Great Recession, economists of various strands, led mainly by Keynesians, are slowly beginning to question the

The Global Financial Crisis of 2008-10: A View from the Social Sectors

The impact of the US financial crisis that unfolded in 2008 has been global. It was felt in output, trade, and cross-border capital flows and transfers. Incomes have dropped and consumption patterns

The Role Credit Rating Agencies Played in the Financial Meltdown of 2008-2009

This is an area dear to the author’s heart, so is the role of Auditors in the global economic meltdown of 2008-2009, however, we this must admit that we were blind to the obvious, either for lack of

Banking, Mortgage and the Credit Industry in the USA

Banks fail because of inadequate capital base, mismanagement of funds, over extension of credit, lack of regulation and control, and unfair competition from foreign banks. Banks face the problem of

Keynes and Economic Crisis: Some Reconsiderations

In this paper we read Keynes’s General Theory of Employment, Interest and Money from the point of view of the main causes of the economic crisis in general and particularly the present world economic

Adverse Selection and Financial Crises

The recent financial crisis has highlighted the importance of adverse selection as a contributing factor to financial market instability. In this article, the author examines the phenomenon of


The standard macroeconomic models have failed, by all the most important tests of scientific theory. They did not predict that the financial crisis would happen; and when it did, they understated its

From the Crisis of Distribution to the Distribution of the Costs of the Crisis: What Can We Learn from Previous Crises about the Effects of the Financial Crisis on Labor Share?

The working paper analyzes the possible distributional consequences of the global crisis based on the lessons of past crises. The decline in the labor share across the globe has been a major factor



Economic Crises: Evidence and Insights from East Asia

THE EAST ASIAN crisis is only the latest in a series of spectacular economic catastrophes in developing countries. In the past twenty years at least ten countries have suffered from the simultaneous

Looting: The Economic Underworld of Bankruptcy for Profit

During the 1980s, a number of unusual financial crises occurred. In Chile, for example, the financial sector collapsed, leaving the government with responsibility for extensive foreign debts. In the

The Procyclical Role of Rating Agencies: Evidence from the East Asian Crisis

type="main" xml:lang="en"> We demonstrate that credit rating agencies aggravated the East Asian crisis. In fact, having failed to predict the emergence of the crisis, rating agencies became

Franchise Value and the Dynamics of Financial Liberalization: The Use of Capital Requirements and Deposit Rate Controls for Prudential Regulation

We would like to thank Jerry Caprio and seminar participants at the William Davidson Institute at the University of Michigan. All remaining errors are our own. This paper represents the views of the

Credit Markets and the Control of Capital

Traditional discussions of the role of capital markets have identified a number of distinct functions which they perforrn: they allocate scarce capital among competing users and uses,l and they

Liberalization, Moral Hazard in Banking and Prudential Regulation: Are Capital Requirements Enough?

In a dynamic model of moral hazard, competition can undermine prudent bank behavior. While capital-requirement regulation can induce prudent behavior, the policy yields Pareto-inefficient outcomes.

Information, Competition, and Markets

One of the dominant characteristics of modern capitalist economies is the important role played by competition: not the peculiar static form of pure price competition embodied in the Arrow-Debreu

The Modern Corporation and Private Property.

This monumental work on the corporation is one of those enduring classics that many cite but few have read. Graced with a new introduction by Weidenbaum and Jensen, this new edition makes this