Edited by Óscar Dejuán, Eladio Febrero and Maria Cristina Marcuzzo
Chapter 12: Long-term Depression and New Markets: Economists and the 2008 Recession
Davide Gualerzi 12.1 INTRODUCTION A cyclical pattern is a well-known aspect of long-term growth. A crisis cannot last forever. However, to get out of the crisis the economy will have to settle into a new growth pattern. The length and severity of the slump are of course important, but so is the new pattern that will emerge. It inevitably implies one of two things: a step forward, or a step backward, an improvement or a deterioration with respect to the previous situation. Our paper focuses on this rarely discussed aspect of the crisis, thus on its relationship to long-term depression. The analysis focuses on the US economy, so that it may not apply to other countries, and developing economies in particular. Still, the main thrust of the argument has a general significance and seems highly relevant for most industrialized economies and especially the EU. Nobel Prize winner Paul Krugman argues that economic theory is brought again to task by the crisis, suggesting that a return to Keynesian ideas is necessary. But is a rehearsal of the debate between Keynesian and non-(or less) Keynesian economists telling the whole story of the current crisis? Or is it leading the way to a larger set of questions for the history of economic analysis? We attempt to argue that there is indeed more on the table. Keynesian interpretations of the crisis focus on unpredictable behaviour, market imperfections and the ‘human’ element. However, it is precisely the characteristics of the current crisis that suggest...
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