Resolving the US Financial Crisis: Politics Dominates Economics in the New Political Economy

PSL Quarterly Review, Vol. 64, No. 256, pp. 23-37, 2011

15 Pages Posted: 18 May 2011

See all articles by Jan A. Kregel

Jan A. Kregel

Bard College - The Levy Economics Institute

Date Written: 2011

Abstract

Most economists expected that the “Great Recession” produced by the financial meltdown of 2008 would usher in a resurgence of traditional Keynesian economics and a decline of what has come to be called “market fundamentalism." By contrast, also due to the inadequate size of the 2009 stimulus package, the resurgence of support for Keynesian expenditure policies has been extremely short lived. However, the negative popular and political reaction should not have come as a surprise for at least three reasons: The design of the Obama stimulus plan and its difference from the expenditure policies of the Roosevelt Administration, the political environment that has eviscerated fiscal policy and placed monetary policy at the center of economic policy and produced “debt driven” growth, and finally the difference between policies appropriate to treating an income deflation and a debt deflation.

Keywords: political economy, financial crisis, Keynesian policies, USA

JEL Classification: G01, B50, N12, H12

Suggested Citation

Kregel, Jan A., Resolving the US Financial Crisis: Politics Dominates Economics in the New Political Economy (2011). PSL Quarterly Review, Vol. 64, No. 256, pp. 23-37, 2011, Available at SSRN: https://ssrn.com/abstract=1837365

Jan A. Kregel (Contact Author)

Bard College - The Levy Economics Institute ( email )

Blithewood
Annandale-on-Hudson, NY 12504
United States
845-758-7700 (Phone)
845-758-1149 (Fax)

Here is the Coronavirus
related research on SSRN

Paper statistics

Downloads
295
Abstract Views
1,278
rank
111,935
PlumX Metrics