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Real economy causes of the Great Deprivation of early 21st Century

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  • Naqvi, Nadeem

Abstract

The American economy has undergone a dramatic structural change in the first decade of the 21st Century. The real-economy causes of this transformation, and their expression via the real estate market and its financial derivatives’ market, and their final manifestation in world financial markets, is explained using traditional economic theory. A three-sector Walrasian general equilibrium model, and a non-Walrasian temporary equilibrium model with fixed prices and quantity constraints, are both utilized to explain the real-economy causes of the observed stylized facts. Some remedies that will likely work, and ones that will not, are also identified. (95 words)

Suggested Citation

  • Naqvi, Nadeem, 2008. "Real economy causes of the Great Deprivation of early 21st Century," MPRA Paper 11369, University Library of Munich, Germany.
    • Handle: RePEc:pra:mprapa:11369
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    References listed on IDEAS

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    1. Feenstra, Robert C., 1986. "Functional equivalence between liquidity costs and the utility of money," Journal of Monetary Economics, Elsevier, vol. 17(2), pages 271-291, March.
    2. Samuelson, Paul A & Sato, Ryuzo, 1984. "Unattainability of Integrability and Definiteness Conditions in the General Case of Demand for Money and Goods," American Economic Review, American Economic Association, vol. 74(4), pages 588-604, September.
    3. Dusansky, Richard, 1989. "The Demand for Money and Goods in the Theory of Consumer Choice with Money," American Economic Review, American Economic Association, vol. 79(4), pages 895-901, September.
    4. J. Peter Neary, 1980. "Nontraded Goods and the Balance of Trade in a Neo-Keynesian Temporary Equilibrium," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 95(3), pages 403-429.
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    Cited by:

    1. Paunic, Alida, 2009. "I did it my way," MPRA Paper 17547, University Library of Munich, Germany.
    2. Atayev, Atabek, 2013. "On the Earliest Economic Growth and Income Inequality; or Modified Old Philosophical, Forgotten or Ignored, Study Reconsidered and Developed," MPRA Paper 45448, University Library of Munich, Germany.

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    More about this item

    Keywords

    financial crisis; credit crunch; mortgage backed securities; fiscal policy; monetary policy; the U.S. economy; outsourcing; international capital mobility;
    All these keywords.

    JEL classification:

    • D5 - Microeconomics - - General Equilibrium and Disequilibrium
    • D3 - Microeconomics - - Distribution
    • F2 - International Economics - - International Factor Movements and International Business
    • E5 - Macroeconomics and Monetary Economics - - Monetary Policy, Central Banking, and the Supply of Money and Credit
    • F1 - International Economics - - Trade
    • E3 - Macroeconomics and Monetary Economics - - Prices, Business Fluctuations, and Cycles

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