Growing Out of the Crisis Through Prudential Regulation of Large Financial Institutions and Redefined Government Responsibilities

53 Pages Posted: 5 Nov 2011

See all articles by Marcel Boyer

Marcel Boyer

CIRANO, Université de Monréal

Date Written: October 31, 2011

Abstract

I consider in this paper the challenges and pitfalls we must face to grow out for good of the recent and latent financial crisis and economic recession. I consider a brief history of the crisis and insist on the loss of confidence within the banking and financial sector, which propagated later to the real sector. I discuss ways to rebuild confidence and move out of a stable bad economic equilibrium, due in part to inefficiently designed bonus systems. Considering data on gross job creation and loss in the private sector, I challenge the sorcerer’s apprentices in reforming capitalism and I recall the role of creative destruction. I show that government deficits and economic growth are not good friends and I offer a reference to the Canadian experience of the two decades 1985-2005. Finally, I discuss fiscal reforms and renewed roles for governmental and competitive sectors in generating a more prosperous economy as well as some specific challenges we are facing today, in particular to redesign the regulatory framework of the financial sector.

Keywords: Financial crisis, confidence, creative destruction, fiscal reforms, prudential regulation, competitive social-democracy

Suggested Citation

Boyer, Marcel, Growing Out of the Crisis Through Prudential Regulation of Large Financial Institutions and Redefined Government Responsibilities (October 31, 2011). CIRANO - Scientific Publications 2011s-66, Available at SSRN: https://ssrn.com/abstract=1954624 or http://dx.doi.org/10.2139/ssrn.1954624

Marcel Boyer (Contact Author)

CIRANO, Université de Monréal ( email )

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HOME PAGE: http://www.cirano.qc.ca/~boyerm

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