The Great Recession of 2008–09: Causes, Consequences and Policy Responses

Abstract

The historical perspective provided in chapter 1 on the decades leading up to the financial crisis shows that the global economy was by no means as stable as had been suggested by many observers. That said, the crisis was largely unexpected and due to its complex roots, it continued to puzzle policymakers, economists and other commentators as it unravelled and sucked in at first banks and companies, and then economies across the globe. The collapse in the real economy has had devastating consequences for households as a result of rising unemployment and surging poverty. At the same time, some countries have been affected more than others as a result of differences in initial conditions (state of economy, labour market, fiscal space, institutional framework) and exposure to direct and indirect impact of the crisis via credit and trade channels.