The Financialization Response to Economic Disequilibria
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The Financialization Response to Economic Disequilibria European and Latin American Experiences

European and Latin American Experiences

  • New Directions in Post-Keynesian Economics series

Edited by Noemi Levy and Etelberto Ortiz

Europe and Latin America’s social and economic stagnation is a direct result of the unresolved phenomena of the financialization crisis that broke out in 2008 in developed countries. Editors Noemi Levy and Etelberto Ortiz analyze the limitations of economic growth and development under capitalist economic organizations where financial capital is dominant, as well as explore alternative economic policies.
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Chapter 3: Debt deflation theory and the Great Recession

Domenica Tropeano and Alessandro Vercelli

Abstract

In the chapter, ‘Debt deflation theory and the Great Recession,’ on the basis of the theory of Irving Fisher, the authors analyse the accumulation of debt in the USA and Europe, emphasizing that the monetary policy deployed in the former did manage to save the banking system, and this did not happen in Europe due to the European Central Bank being less able to intervene in the economy, and the absence of an authority empowered to coordinate spending.

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