2014 Chapters (Layout Features)

The Lessons of the North Atlantic Crisis for Economic Theory and Policy

Stiglitz, Joseph E.

In analysing the financial crisis that began in 2007 and led to the Great Recession, we should try to benefit somewhat from the misfortune of recent decades: The approximately 100 crises that have occurred during the last 30 years –as liberalization policies became dominant – have given us a wealth of experience and mountains of data. If we look over a 150-year period, we have an even richer data set. With a century and half of clear, detailed information on crisis after crisis, the burning question is not ‘How did this happen?’ but ‘How did we ignore that long history, and think that we had solved the problems with the business cycle’? Believing that we had made big economic fluctuations a thing of the past took a remarkable amount of hubris.