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41. Ups and Downs in Finance, Ups without Downs in Inequality

Author:
Olivier Godechot, Nils Neumann, Paula Apascaritei, István Boza, and Martin Hällsten
Publication Date:
11-2021
Content Type:
Working Paper
Institution:
Max Planck Sciences Po Center on Coping with Instability in Market Societies (MaxPo)
Abstract:
The upswing in finance over the past several decades has led to rising inequality, but do downswings in finance lead to a symmetric decline in inequality? In this paper, we analyze the asymmetry of the effect of ups and downs in financial markets, as well as the effect of increased capital requirements and the bonus cap on national earnings inequality. We use administrative employer–employee linked data on earnings from 1990 to 2017 for twelve countries. Additionally, we use data on earnings from bank reports, from 2009 to 2017 in thirteen European countries. We find a strong asymmetry in the effects of financial ups and downs on earnings inequality, a mitigating effect of rising capital requirements on the contribution of finance to inequality, and a restructuring effect of the bonus cap for the earnings of financiers, while neither policy affects absolute levels of earnings inequality.
Topic:
Financial Crisis, Regulation, Inequality, and Finance
Political Geography:
Europe

42. How Govenrment Outflow and Public Debt Affect Inflation: Evidence from See Countries

Author:
Ereza A. Arifi
Publication Date:
09-2021
Content Type:
Journal Article
Journal:
Journal of Liberty and International Affairs
Abstract:
The study aims to address public debt and government outflow affecting inflation in some of the countries of Southeast Europe, observing a combination of factors both theoretically and econometrically. The investigation included six (6) SEE countries, including the 2006-2020 timeframe, with 90 observations. The dynamic approach, the fixed effect, and the Arellano/Bond estimator were used to check the parameters considered in the study using panel data. Furthermore, the study also applied diagnostic tests such as the Sargan over-identifying restrictions and Pedroni test for cointegration. The results of the fixed effect and Arellano / Bond estimation demonstrate that public debt, current budget outflows, and capital budget outflows affect inflation, while overall budget outflows are insignificant. For further studies, it would be useful to apply other dynamic models by applying other specific factors, which will be considered as a useful contribution to the academic, research, and policy-making structures.
Topic:
Financial Crisis, Governance, Finance, Inflation, and Public Debt
Political Geography:
Global Focus

43. The Soft Touch of International Financial Regulation: Status, Flaws and Future

Author:
Niall O'Shaughnessy
Publication Date:
06-2021
Content Type:
Journal Article
Journal:
The Goettingen Journal of International Law
Institution:
The Goettingen Journal of International Law
Abstract:
The 2008 global financial crisis focused attention on the relationship between the behaviour of international financial institutions and the rules they follow. Many banks in the US and Europe failed, in part, due to their inability to absorb the fallout of the US mortgage market collapse. If international financial institutions could not protect themselves from the cycles of the market, how come regulators were unable to do so either? The most relevant instrument of international financial regulation for understanding the 2008 crisis is the Basel Accords, the rules that specify how much capital a bank should always hold in reserve. However, these rules are ‘soft law’ and so, non-binding. It is a myth of course that soft law is the only way to regulate international finance, as many scholars argue. Despite numerous rounds of reform, the Basel Accords have always been inadequate. The purpose of this paper is to account for the flaws of the Basel Accords and the role that soft law plays in creating those flaws. This paper also analyses the competing theories behind the rise of soft law within financial regulation and the ‘political economy’ explanation is endorsed. The final section of the paper discusses the future of financial regulation and soft law, as well as highlighting innovations from outside the hard/soft law dichotomy and outside the Global North. This paper concludes by stating that the theory behind soft law does not play out in practice within finance and that it remains in place because it suits the interests of large institutions and powerful states. At the same time, a return to Bretton Woods or a new World Financial Organization is problematic and, as such, we must look beyond the hard/soft law debate and embrace the work of the Global South and East.
Topic:
Markets, Financial Crisis, Regulation, Capital, and Banking
Political Geography:
Global Focus

44. Lebanon’s Pandemic in Context

Author:
Ziad Abu-Rish
Publication Date:
06-2021
Content Type:
Special Report
Institution:
Center for Contemporary Arab Studies (CCAS)
Abstract:
ADF Fellow Ziad Abu-Rish takes a deeper look at COVID-19’s spread in Lebanon and how it intersects with the country’s ongoing crises.
Topic:
Poverty, Financial Crisis, Crisis Management, Unemployment, Public Health, Pandemic, and COVID-19
Political Geography:
Middle East and Lebanon

45. Fiscal Policy as Credit Policy: Reassessing the Fiscal Spending vs. Private Debt Trade-Off

Author:
Etienne Lepers
Publication Date:
01-2021
Content Type:
Working Paper
Institution:
City Political Economy Research Centre (CITYPERC), University of London
Abstract:
This paper revisits the dominant narrative that explains the substantial household credit boom as a substitute to fiscal redistribution, i.e. the “substitution” hypothesis, according to which fiscally-constrained governments substituted public safety nets by private credit. I argue instead that the credit and welfare state constituencies may not necessarily be the same and that far from fiscally constrained, governments have been actively using “fiscal policy as credit policy”. I provide two sets of empirical evidence for such account: First, I find a positive within-country relationship between household debt and fiscal spending. Second, compiling a unique dataset of 550 fiscal subsidies adjustments in 50 countries since 1980, I show that fiscal and tax subsidies have been instrumental in driving household credit. These dynamics have distributional and financial stability implications as such tax subsidies typically favour higher income households and household debt booms have proven more dangerous than corporate ones.
Topic:
Debt, Financial Crisis, Welfare, Financialisation, Subsidies, Household, and Public Finance
Political Geography:
Global Focus

46. Individual Accountability in International Economic Policymaking after the Global Financial Crisis

Author:
Stefano Pagliari and Iosif Kovras
Publication Date:
05-2021
Content Type:
Working Paper
Institution:
City Political Economy Research Centre (CITYPERC), University of London
Abstract:
In the aftermath of the global financial crisis, the design of accountability mechanisms has taken on renewed importance in academic and policy debates. Calls for holding individuals whose actions and omissions contributed to the meltdown accountable have gained traction in a number of countries after the crisis. Yet, individual accountability norms are seemingly absent from the international economic agenda in response to crisis. In this paper we address this puzzle by exploring the evolution of two major international organisations, the IMF and the FSB, in bringing accountability following financial crises. Our analysis reveals how these institutions have increasingly incorporated in their toolkit policy recommendations related to the unethical or illegal conduct by government officials of individuals in the financial industry, but these tools were geared almost exclusively towards forward-looking policies designed to deter the reoccurrence of illegal or unethical behavior rather than punishing or scrutinizing past wrongdoing. We argue that the extent to which individual accountability norms permeate the international economic agenda is mediated by the institutional characteristics of the organizations that comprise the international financial regime.
Topic:
Financial Crisis, Governance, Culture, Accountability, and Bureaucracy
Political Geography:
Global Focus

47. Causal Mechanism and Explanation in Social Science

Author:
Renate Mayntz
Publication Date:
04-2020
Content Type:
Working Paper
Institution:
Max Planck Sciences Po Center on Coping with Instability in Market Societies (MaxPo)
Abstract:
In the social sciences, the development of a specific social event or structure is often explained by a statistical correlation between an independent variable and a variable assumed to be dependent upon it. This mode of explanation is contested by a methodology of causal reconstruction that operates with the concept of mechanisms. A mechanism is a process in which a set of linked steps leads from initial conditions to an outcome or effect. Mechanisms are general concepts, subjecting individual cases to a general category. Except for the literature dealing specifically with the concept, the term “mechanism” is often used without definition of its substantive content; there is no agreement with respect to the unique or plural character of the initial conditions, nor to the structure of the causal path leading to a specific outcome. Nevertheless, mechanisms have played a crucial role in detailed causal analysis of complex historical events, such as the financial crisis of 2008 and German unification of 1989.
Topic:
Financial Crisis, Reconstruction, Unification, Social Science, and Mechanism
Political Geography:
Europe, Germany, and United States of America

48. Beyond Coronabonds: A New Constituent for Europe

Author:
Nicoletta Pirozzi
Publication Date:
04-2020
Content Type:
Commentary and Analysis
Institution:
Istituto Affari Internazionali
Abstract:
Every era has its symbols. In 1984, Mitterrand and Kohl held hands on the battlefield in Verdun, coming to symbolise the importance of peace in the pursuit of European integration. Today, in times of COVID-19, the so-called “Coronabonds” could have emerged as the symbol of a new Europe, one that is ready and able to do what it takes to collectively overcome the present crisis. Yet, what some member states consider an indispensable emblem of European solidarity, namely debt mutualisation to face an unprecedented symmetric crisis brought about by COVID-19, is regarded by others as an ultimate excuse for moral hazard. As a result, Europe could end up with a politically more digestible European Fund, as proposed by Commissioners Paolo Gentiloni and Thierry Breton, designed to issue long-term bonds.[1] Or, as outlined by the Eurogroup, a Recovery Fund that is “temporary, targeted and commensurate” to the extraordinary costs of the current crisis, helping to spread them across time.
Topic:
Financial Crisis, Governance, Finance, Economy, and Coronavirus
Political Geography:
Europe and European Union

49. Assessing Israel Katz’s First Year as Foreign Minister

Author:
Nimrod Goren
Publication Date:
02-2020
Content Type:
Commentary and Analysis
Institution:
Mitvim: The Israeli Institute for Regional Foreign Policies
Abstract:
In February 2019, Israel Katz was named Israel’s interim foreign minister, and three months later his appointment became permanent. This ended a period of almost four-years without a fulltime foreign minister, during which the Ministry of Foreign Affairs (MFA) significantly declined. A year into Katz’s term, an assessment can be made as to whether his appointment has strengthened the MFA and left a policy imprint. This, while taking into consideration the turmoil in Israeli politics since early 2019 and the understanding that deeper change requires a ministerial tenure longer than a year. This article sums up Katz’s first year on the job, based on media reports and information published by the MFA. It examines both intra-ministerial and policy aspects, and concludes that Katz is operating in Netanyahu’s heavy shadow, has failed to address the deep budgetary crisis faced by the MFA, and has focused on developing ties with Gulf States and combatting anti-Semitism.
Topic:
Government, Politics, Financial Crisis, and Benjamin Netanyahu
Political Geography:
Middle East, Israel, and Gulf Nations

50. Bank recapitalizations in Greece: From state-led bailouts to the ownership transfer of banks to foreign hands

Author:
Athanasios Kolliopoulos
Publication Date:
05-2020
Content Type:
Working Paper
Institution:
Hellenic Foundation for European and Foreign Policy (ELIAMEP)
Abstract:
A decade after the conclusion of the first economic adjustment programme in 2010 and despite three consecutive recapitalizations, Greek banks still suffer from the highest Non-Performing Loans ratio in the Eurozone, with credit expansion in the “real economy” remaining anemic. Furthermore, the overall impact on public debt from government financial support to Greek banks over the last decade was one of the largest among the Eurozone countries. What went wrong? What were the reasons that the domestic financial system ended up in this exceptionally sad state? Why did the recapitalization policy not have the desired outcome? Exploring these questions throughout the literature of responses to banking crises, this paper shows that recapitalization policy in Greece failed to exploit the advantages of the principal forms of bank rescues. In fact, the significant inertia prevailing among authorities and bankers throughout the recapitalizations brought about the ownership transfer of the Greek banking system to foreign hands (“dehellenization”) after the third recapitalization in late 2015. You may acces the full paper by Dr. Athanasios Kolliopoulos, Postdoctoral Researcher at the Athens University of Economics and Business, here.
Topic:
Financial Crisis, Banks, Recapitalizations, Bailout, and Banking Crisis
Political Geography:
Europe and Greece

51. It’s Time for a New Deal

Author:
Constantine Michalopoulos
Publication Date:
01-2020
Content Type:
Policy Brief
Institution:
Hellenic Foundation for European and Foreign Policy (ELIAMEP)
Abstract:
The prospects of the Greek economy are mostly good with growth continuing for the fourth straight year. But there is a sense of disappointment, as the recovery has not been very strong and pre-crisis income levels will not be regained for another decade. There are two main reasons for the sluggish recovery: The European creditors have imposed on Greece the requirement to run a primary budget surplus of 3.5% of GDP for five years to ensure that they get repaid—a requirement that constricts growth of the Greek private sector—through heavy taxation of consumers and business. And domestic investment is sluggish, although there are plenty of unutilized resources, such as those provided by the European Structural Funds. There is a need for a new deal with the European Institutions: the Europeans should be more relaxed about getting repaid because of Greece’s much improved access to the European capital markets and be willing to accept a Greek government commitment to a significantly lower primary budget surplus for the next several years. In exchange the Greek government should commit to a commensurate increase in domestic investment through reforms of the banking sector as well as greater public sector investment spending.
Topic:
Government, Financial Crisis, Economy, Economic Growth, and Public Spending
Political Geography:
Europe and Greece

52. The economic impact of COVID-19 on the EU: From the frying pan into the fire

Author:
Fabian Zuleeg
Publication Date:
04-2020
Content Type:
Working Paper
Institution:
European Policy Centre (EPC)
Abstract:
The world is facing an unprecedented economic crisis due to the ongoing COVID-19 pandemic. At a time when the first instinct is to focus on the national level and greater sovereignty and self-reliance, the best strategy to answer the crisis lies in greater cooperation. Fabian Zuleeg analyses the onset of this crisis and provides sound predictions of future economic impacts by applying lessons from previous recessions.
Topic:
Financial Crisis, Economy, and COVID-19
Political Geography:
Europe

53. The Eye of the Storm

Author:
George G. Namur
Publication Date:
01-2020
Content Type:
Journal Article
Journal:
Harvard Journal of Middle Eastern Politics and Policy
Institution:
The John F. Kennedy School of Government at Harvard University
Abstract:
Lebanon is in the throes of an unprecedented crisis in its modern history. Starting 17 October 2019, the people of Lebanon have been protesting in the streets in a broad-based uprising. This paper highlights key post–civil war realities and practices that led to the country teetering and proposes a solution package to what ails the country and threatens its future.
Topic:
Corruption, Financial Crisis, Governance, Social Movement, Revolution, and Political Crisis
Political Geography:
Middle East and Lebanon

54. Why a Traditional Austerity Plan Would Exacerbate Lebanon’s Woes

Author:
Mounir Mahmalat
Publication Date:
01-2020
Content Type:
Journal Article
Journal:
Harvard Journal of Middle Eastern Politics and Policy
Institution:
The John F. Kennedy School of Government at Harvard University
Abstract:
Following the eruption of mass protests in autumn 2019, Lebanon’s economy slid into a deep financial and economic crisis. Given the magnitude of Lebanon’s contemporary economic woes, a bailout program with participation by the International Monetary Fund (IMF) appears unavoidable. However, while a bailout program could avoid formal default and cushion the immediate effects of financial impasse, the austerity measures that will come attached are unlikely to achieve their goals. This article argues that in clientelist polities with weak states such as Lebanon’s, austerity programs carry the risk of leaving unaddressed the underlying inefficiencies that led to economic decline in the first place. Instead of prioritizing budgetary measures and spending cuts in a conditional reform program, international donors should seize this novel window of opportunity to legitimize a reform plan with popular demands. Measures to increase judiciary independence and political accountability in particular bear a larger potential than austerity measures alone to change politics and finally create a sustainable economic model.
Topic:
Financial Crisis, Austerity, Sustainability, and Economic Stability
Political Geography:
Middle East and Lebanon

55. The Economic Consequences of Globalisation in the United States

Author:
Peter Petri and Meenal Banga
Publication Date:
01-2020
Content Type:
Working Paper
Institution:
Economic Research Institute for ASEAN and East Asia (ERIA)
Abstract:
The unprecedented rise in global interdependence since World War II, especially since the 1970s, has been very productive. World gross domestic product (GDP) growth increased from around 2% per year in the 1970s to 4% per year before the global financial crisis. Globalisation helped to lift a billion people from extreme poverty and improved the lives of billions more. The United States also gained an estimated 11%–19% of its annual GDP. Yet many Americans are concerned about the fairness of these gains. We review evidence of increasing wage inequality and stubborn unemployment effects, even though, on balance, technological change has had a much greater impact on these outcomes than globalisation. Barriers against globalisation do not offer solutions to inequality – they reduce the size of the economic pie without necessarily improving its distribution. Policies should focus on redistributing gains from growth, increasing the productivity of all workers, and helping affected communities adapt socially and economically to rapid change.
Topic:
Globalization, Financial Crisis, Inequality, and Economic Growth
Political Geography:
United States and North America

56. Coping with Disasters: Two Centuries of International Official Lending

Author:
Sebastian Horn, Carmen M. Reinhart, and Christoph Trebesch
Publication Date:
06-2020
Content Type:
Working Paper
Institution:
Kiel Institute for the World Economy (IfW)
Abstract:
Official (government-to-government) lending is much larger than commonly known, often surpassing total private cross-border capital flows, especially during disasters such as wars, financial crises and natural catastrophes. We assemble the first comprehensive long-run dataset of official international lending, covering 230,000 loans, grants and guarantees extended by governments, central banks, and multilateral institutions in the period 1790-2015. Historically, wars have been the main catalyst of government-to-government transfers. The scale of official credits granted in and around WW1 and WW2 was particularly large, easily surpassing the scale of total international bailout lending after the 2008 crash. During peacetime, development finance and financial crises are the main drivers of official cross-border finance, with official flows often stepping in when private flows retrench. In line with the predictions of recent theoretical contributions, we find that official lending increases with the degree of economic integration. In crises and disasters, governments help those countries to which they have greater trade and banking exposure, hoping to reduce the collateral damage to their own economies. Since the 2000s, official finance has made a sharp comeback, largely due to the rise of China as an international creditor and the return of central bank cross-border lending in times of stress, this time in the form of swap lines.
Topic:
Debt, International Political Economy, War, History, Financial Crisis, Trade, and Banking
Political Geography:
Global Focus

57. Creation of a European Solidarity Funds: Directing Europeans’ savings towards their growth companies

Author:
Emmanuel Sales
Publication Date:
11-2020
Content Type:
Policy Brief
Institution:
Robert Schuman Foundation (RSF)
Abstract:
Europe has an excess of savings and its companies lack equity capital. This diagnosis was made a long time ago and the crises the continent has been going through over the last 10 years have accentuated this gap. European growth companies are rapidly falling prey to large non-European firms that benefit from a deep and liquid stock market. Thus, despite the existing arrangements, Europe is unable to impose world champions that would allow it to build its sovereignty against the United States and China. The creation of a new category of UCITS funds open to all EU savers, the European Sovereign Funds, would help us respond to this challenge by providing medium-sized companies with the fresh capital they need to ensure their development and independence.
Topic:
Financial Crisis, European Union, Economic Growth, and Capital
Political Geography:
Europe

58. Global Financial Imbalance: Firm-level Evidence from Korea

Author:
Tae Soo Kang, Kyunghun Kim, and Yuri Kim
Publication Date:
05-2020
Content Type:
Working Paper
Institution:
Korea Institute for International Economic Policy (KIEP)
Abstract:
Since the global financial crisis, low interest rates have continued throughout the world. However, financial imbalance has deepened as much of the expanded investment during low interest rates did not lead to increased productivity. This study focused on the increase of marginal firms as a result of the adverse effects of financial imbalances on firms. The marginal firms were identified based on the company's financial statement, and the share of marginal firms by country was compared and analyzed using Worldscope data. As a detailed analysis on the marginal firms, the impact of borrowing interest rate on the possibility of becoming a marginal company was analyzed in the case of Korea with KED data. According to the international comparison, East Asia including Korea, China and Japan has shown a lower share of marginal companies than Europe, South Asia and Latin America. Empirical results through Panel Logit with Sector Fixed Effect Model show that the borrowing rate has a negative correlation with the probability the company will become a marginal company in the case of Korea. However, the impact of an increase in borrowing rates on the likelihood of becoming a marginal company depends on the degree of financial vulnerability. Specifically, an increase in the borrowing rate has a greater impact on the possibility to become ICR<1 in the companies with higher financial vulnerability indexes.
Topic:
Financial Crisis, Business, and Business Management
Political Geography:
Asia and South Korea

59. Financial Inclusion Through Fintech in the Digital Economy

Author:
Eunsook Seo and Kyeongwon Yoo
Publication Date:
12-2020
Content Type:
Special Report
Institution:
Korea Institute for International Economic Policy (KIEP)
Abstract:
Since the 2008 global financial crisis, including the recent COVID 19 pandemic, low interest rates and low economic growth have continued around the world. In spite of this low interest rate trend, as the economic downturn prolongs, there is a situation of concern called the “new normal” of low interest rates and low economic growth, and low prices. In this new normal economic structure, the rapid progress of aging is increasing the necessity and desire for asset accumulation. In addition, digital finance such as Fin-tech with the evolution of the underlying technologies and the emergence of new technologies has replaced or improved many functions of existing finance in the advent of the 4th industrial revolution era. These changes are expected to bring benefits to the individual and corporate finance sectors, which have been subject to financial inclusion. On the other hand, digital finance, which is changing at such a rapid pace, may further isolate some individuals who were in the blind spot of finance, such as the elderly, and a support system for this is an issue that should be included in the policy of financial inclusion in each country. In this paper we find that Asian countries like other regions have achieved tangible results in financial inclusion while achieving financial deepening. When looking through various financial inclusion indicators such as holding accounts and loans, ATMs, and bank branches, the Asian region has achieved similar or superior performance to other regions. Compared to the income level, the growth of financial inclusion in Asia was found to be attributable to better performance in middle-income countries than in other similar regions. High-income countries in Asia are performing somewhat lower than similar peer groups in other regions, but this seems to be due to stagnation of growth. More seriously, financial inclusion in low-income countries in Asia is not appearing faster than in other income groups. In Asian countries there appears to be a wide variation in regional financial inclusion. However, Asian countries are expanding around the younger generation in the use of ICT technology that is helpful in spreading financial inclusion so if digital inclusive finance centered on Fintech is properly applied, Asian countries will become a new model for digital financial inclusion. However, since the gap in the use of Fintech in the region is large, how to fill this gap is being raised as an important policy task for each country as well as the whole region. We also tentatively examined the effects of financial inclusion and digital financial inclusion in the Asian region using the Asian country panel data collected from WDI and Global Findex data. Looking at the implications of the empirical analysis results even though it is very cautious to interpret the results of this analysis due to the lack of data of inclusive finance in Asia., first, the expansion of financial inclusion(such as ATM) in Asia seems to have some relationship with the reduction of poverty rates and income inequality which is measured with Gini coefficient. And the expansion of internet usage in Asia seems to have some relationship with the reduction of poverty rates and income inequality although we use it as the proxy variables instead of the digital financial inclusion variables. Lastly, the higher share of rural population which is used as a proxy for digital divide, which may occur due to the expansion of digital inclusive finance in Asia, has the potential to erode some of these achievements, but there is still a possibility that the expansion of inclusive finance will be effective. Despite the likelihood of success in digital inclusive finance in the future, digital divide spreads due to various gaps such as between urban and rural areas, between young and old, between low and high income, and between men and women, occurring in Asian countries and may worsen the performance of inclusive finance. Thus the governments in the region need to actively intervene to resolve these gaps. In addition, it is necessary to close the digital gaps that is occurring between countries through policy cooperation among APEC members. Considering the situation that the degree of development of Fintech in each member is expanding financial inclusion, it is necessary for Korean financial companies to set up an advancement strategy that focuses on the financially marginalized class based on the advanced system strategy of credit rating based on big data. Our analysis results will give some implications for the New Southern Policy. Personal and SME finance are very important business areas when financial companies currently enter the ASEAN region, and accurate analysis of each member' current status for Fintech or digital finance and financial inclusion should be given priority in terms of business expansion.
Topic:
Poverty, Financial Crisis, Finance, Income Inequality, COVID-19, Inclusion, and Digital Finance
Political Geography:
Asia and Global Focus

60. Is the economy doomed to a long recession?

Author:
Andrzej Halesiak and Andrzej Rzońca
Publication Date:
09-2020
Content Type:
Special Report
Institution:
Center for Social and Economic Research - CASE
Abstract:
Forecasting during a strong shock is burdened with exceptionally high uncertainty. This gives rise to the temptation to formulate alarmist forecasts. Experiences from earlier pandemics, particularly those from the 20th century, for which we have the most data, don’t provide a basis for this. The mildest of them weakened growth by less than 1 percentage point, and the worst, the Spanish Flu, by 6 percentage points. Still, even the Spanish Flu never caused losses on the order of 20% of GDP – not even where it turned out to be a humanitarian disaster, costing the lives of 3-5% of the population. History suggests that if pandemics lead to such deep losses at all, it’s only in particular quarters and not over a whole year, as economic activity rebounds. The strength of that rebound is largely determined by economic policy. The purpose of this work is to describe possible scenarios for a rebound in Polish economic growth after the epidemic. A separate issue, no less important, is what world will emerge from the current crisis. In the face of the 2008 financial crisis, White House Chief of Staff Rahm Emanuel said: “You never want a serious crisis to go to waste. And what I mean by that is an opportunity to do things that you think you could not do before.” Such changes can make the economy and society function better than before the crisis. Unfortunately, the opportunities created by the global financial crisis were squandered. Today’s task is more difficult; the scale of various problems has expanded even more. Without deep structural and institutional changes, the world will be facing enduring social and economic problems, accompanied by long-term stagnation.
Topic:
Financial Crisis, Economy, Economic Growth, Crisis Management, Fiscal Policy, and Trade
Political Geography:
Global Focus