The Great Financial Crisis that began in 2007 reminds us with devastating force that financial instability and crises are endemic to capitalist economies, and that it is only strong and dynamically-changing financial regulations that can keep the damage caused by these crises within bounds. The international financial system and individual national economies, including that of the United States, are suffering from the aftermath of the worst financial crisis since the Great Depression. Economists are struggling to understand the origins and implications of the crisis. The Handbook of the Political Economy of Financial Crises uses a political economy theoretical framework to analyze the crisis.After an opening chapter that describes the dimensions of the current crisis, the next section provides relevant theoretical frameworks. Subsequent sections apply these theoretical frameworks to analyze the background, dimensions, and implications of the crisis for the world economy. Leading scholars push forward our understanding of how and why our international and domestic economies are susceptible to financial breakdown and what can be done to mitigate this problem in the future.The methodology throughout applies theoretical concepts in the context of an historical and institutional understanding of the real world. By emphasizing the historical and institutional aspects of financial crises, the authors advance economic knowledge and provide insights into how we can manage our financial system to improve the lives of ordinary people.
Table of Contents
Introduction1. Gerald A. Epstein and Martin H. WolfsonPART I: THE GREAT FINANCIAL CRISIS: U.S. DYNAMICS AND EFFECTS2. The Origins of the U.S. Financial Crisis of 2007: How a House Price Bubble, a Credit Bubble, and Regulatory Failure Caused the Greatest Economic Disaster Since the Great Depression.Marc Jarsulic3. Speculation and Asset BubblesDean Baker4. The Great Recession's Impact on Jobs, Wages, and IncomesJosh Bivens and Heidi Shierholz5. Distribution and Crisis: Reviewing Some of the LinkagesArjun Jayadev6. Housing Markets and ForeclosuresRachel Drew and Christian WellerPART II: THEORETICAL APPROACHES FOR UNDERSTANDING FINANCIAL CRISES7. The Realism of Assumptions Does Matter: Why Keynes-Minsky Theory Must Replace Efficient Market Theory as the Guide to Financial Regulation PolicyJames Crotty8. Political Economy Approaches to Financial Crisis: Hyman Minsky's Financial Fragility HypothesisJan Kregel9. An Institutional Theory of Financial CrisesMartin H. Wolfson10. The Anatomy of Financial and Economic CrisisDuncan K. FoleyPART III: THE GLOBAL DIMENSIONS OF FINANCIAL CRISES11. The Economic and Financial Crisis of 2008-2010: The International DimensionAjit Singh12. Global Imbalances and the International Monetary System: Problems and ProposalsJane D'Arista and Korkut Erturk13. How the Full Opening of the Capital Account to Highly Liquid and Unstable Financial Markets Led Latin America to Two and a Half Cycles of 'Mania, Panic and Crash'José Gabriel Palma14. Financial and Currency Crises in Latin AmericaMario Damill, Roberto Frenkel and Martin Rapetti15. The Asian Financial Crisis, Financial Restructuring and the Problem of ContagionC. P. Chandrasekhar and Jayati Ghosh16. Speculation and Sovereign Debt - An Insidious InteractionGerald Epstein and Pierre Habbard17. Whither the Euro? History and Crisis of Europe's Single-Currency ProjectRobert Guttmann and Dominique Plihon18. The Eurozone Crisis through the Prism of World MoneyCostas LapavitsasPART IV: THE ROLE OF INSTITUTIONAL AND STRUCTURAL CHANGE IN THE DEVELOPMENT OF FINANCIAL CRISES19. Changes in the Postwar Global Economy and the Roots of the Financial CrisisDavid M. Kotz20. Bank Lending and the Subprime CrisisGary Dymski21. Deregulation and the New Financial ArchitectureDamon Silvers22. What We Don't Talk About When We Talk About BankingJennifer S. Taub23. Derivatives in the Crisis and Financial ReformMichael Greenberger24. From Innovation to Financialization: How Shareholder Value Ideology is Destroying the US EconomyWilliam Lazonick25. Financialization and the Global EconomyEngelbert Stockhammer26. The International Spread of FinancializationWilliam K. TabbPART V: POLICY AND INSTITUTIONAL CHANGE TO LIMIT FINANCIAL CRISES27. International and Regional Cooperation for Dealing with Financial CrisesJose Antonio Ocampo28. Productive Incoherence in a Time of Crisis: The IMF and the Resurrection of Capital ControlsIlene Grabel29. The Japanese Boom and Bust: " LessonsRobert McCauley30. The Role of the Federal Reserve: Lender of Last ResortChris Rude31. Monetary Policy and Central Banking after the Crisis: The Implications of Rethinking Macroeconomic TheoryThomas I. Palley32. The Bailout of the "Too-Big-to-Fail" Banks: Never AgainFred Moseley33. The Savings and Loan Crisis and Bailout: Lessons for PolicyDorene Isenberg34. Pension Policies to Minimize Future Economic CrisesTeresa Ghilarducci35. A Minskian Road to Financial ReformRandall Wray36. The Global Financial Crisis and Africa: The Effects and Policy ResponsesZuzana Brixiova and Léonce Ndikumana37. Beyond Capitalism?Minqi Li