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The Global Financial Crisis: a crisis within the economic system

In: Western Welfare Capitalisms in Good Times and Bad

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Abstract

The Global Financial Crisis (GFC) was an endogenous crisis; that is, a crisis within the economic system, and specifically in the banking system. In most countries there was a ‘second dip’ recession in 2012-13, which resulted in higher unemployment and lower economic growth than in the ‘first dip’ of 2008-09. All regimes initially responded to the crisis with Keynesian fiscal and monetary stimuli; acting contrary to mainstream economic theory. But in the second dip responses diverged. Sweden followed social democratic priorities in expanding its active labour market programs to minimise unemployment. Germany followed corporatist priorities by using short-time work programs to share employment and promote family income stability. In the Southern European proto-corporatist regimes, externally imposed austerity and ‘internal devaluation’ measures resulted in disastrously high unemployment and close-to-zero growth.

Suggested Citation

  • ., 2023. "The Global Financial Crisis: a crisis within the economic system," Chapters, in: Western Welfare Capitalisms in Good Times and Bad, chapter 4, pages 57-68, Edward Elgar Publishing.
    • Handle: RePEc:elg:eechap:22334_4
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    File URL: https://www.elgaronline.com/doi/10.4337/9781035312306.00010
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    Cited by:

    1. D’Ercole, Francesco & Wagner, Alexander F., 2023. "The green energy transition and the 2023 Banking Crisis," Finance Research Letters, Elsevier, vol. 58(PC).
    2. Lukanima, Benedicto Kulwizira & Sanchez-Barrios, Luis Javier & Gómez-Bravo, Yuli Paola, 2024. "Towards understanding MILA stock markets integration beyond MILA: New evidence between the pre-Global financial crisis and the COVID19 periods," International Review of Economics & Finance, Elsevier, vol. 89(PA), pages 478-497.

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