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The World Credit Crisis: Understanding It, and What To Do

Author

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  • W. Max Corden

    (Department of Economics, The University of Melbourne)

Abstract

This paper expounds a story in four stages to explain the world credit crisis, namely: (1) too much credit - an international perspective, (2) too much risk - reaction to low real interest rate, (3) the fatal flaw - the new complex financial instruments, and (4) the panic- bank lending dries up. The paper also discusses the relationship of this crisis to the often-expected crisis of the global imbalances, and it outlines various policy implications.

Suggested Citation

  • W. Max Corden, 2008. "The World Credit Crisis: Understanding It, and What To Do," Melbourne Institute Working Paper Series wp2008n25, Melbourne Institute of Applied Economic and Social Research, The University of Melbourne.
    • Handle: RePEc:iae:iaewps:wp2008n25
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    File URL: http://melbourneinstitute.unimelb.edu.au/downloads/working_paper_series/wp2008n25.pdf
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    References listed on IDEAS

    as
    1. W. Max Corden, 2007. "Those Current Account Imbalances: A Sceptical View1," The World Economy, Wiley Blackwell, vol. 30(3), pages 363-382, March.
    2. James Tobin, 1996. "Full Employment and Growth," Books, Edward Elgar Publishing, number 800.
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    Cited by:

    1. Mejra Festić, 2011. "The role of the foreign banks in the 5 EU member states," Journal of Business Economics and Management, Taylor & Francis Journals, vol. 13(1), pages 189-206, June.
    2. Pomfret, Richard, 2010. "The financial sector and the future of capitalism," Economic Systems, Elsevier, vol. 34(1), pages 22-37, March.
    3. Richard Pomfret, 2009. "The Post‐2007 Financial Crisis and Policy Challenges facing Australia," Economic Papers, The Economic Society of Australia, vol. 28(3), pages 255-263, September.
    4. Prema‐chandra Athukorala & Hal Hill & Sisira Jayasuriya, 2021. "Economist as public intellectual: Max Corden’s journey through life," The World Economy, Wiley Blackwell, vol. 44(6), pages 1472-1483, June.
    5. Jonathan E. Ogbuabor & Anthony Orji & Gladys C. Aneke & Manasseh O. Charles, 2019. "Did the global financial crisis alter the oil–gasoline price relationship?," Empirical Economics, Springer, vol. 57(4), pages 1171-1200, October.
    6. Rossana Merola & Douglas Sutherland, 2012. "Fiscal Consolidation: Part 3. Long-Run Projections and Fiscal Gap Calculations," OECD Economics Department Working Papers 934, OECD Publishing.
    7. Ian M. McDonald, 2009. "The Global Financial Crisis and Behavioural Economics," Economic Papers, The Economic Society of Australia, vol. 28(3), pages 249-254, September.

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