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Lessons from the Crisis: the Macroeconomics of Leverage

  • Paolo Leon
Chapter
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Abstract

Let me advance a possible explanation of the current stagnation and of the preceding crisis and crash. The 2007 crash, generally thought to be of financial origin, is imputed to speculation without regulation and/or to the inevitable eventual failure of otherwise self-fulfilling expectations: surely, there must be more to it, and an ample literature has accordingly developed. In this chapter I shall merely offer hypotheses, unaccompanied by statistical proof. Logic mistakes are likely, but my purpose is to stimulate research by others. In the following argument I will discuss events in the USA and the UK, and to a lesser extent continental Europe (perhaps Japan) - the argument is restricted to something that looks like a closed economy; and, in effect, if a China was not there, I don’t know what part of the following could stand.

Keywords

Central Bank Bargaining Power Full Employment Wage Earner Consumption Function 
These keywords were added by machine and not by the authors. This process is experimental and the keywords may be updated as the learning algorithm improves.

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References

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© contributors 2013

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  • Paolo Leon

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