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The Global Financial Crisis and Behavioural Economics

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  • Ian M. McDonald

Abstract

Conventional economics, which is based on Homo economicus, cannot provide a satisfactory explanation for the global financial crisis. However, behavioural economics, and the concept of present bias, self‐serving bias, ‘new era’ stories, money illusion, comparisons with reference levels and herding, can provide an explanation.

Suggested Citation

  • Ian M. McDonald, 2009. "The Global Financial Crisis and Behavioural Economics," Economic Papers, The Economic Society of Australia, vol. 28(3), pages 249-254, September.
    • Handle: RePEc:bla:econpa:v:28:y:2009:i:3:p:249-254
    DOI: 10.1111/j.1759-3441.2009.00026.x
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    References listed on IDEAS

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    1. Olivier Blanchard, 2009. "The Crisis: Basic Mechanisms and Appropriate Policies," CESifo Forum, ifo Institute - Leibniz Institute for Economic Research at the University of Munich, vol. 10(01), pages 3-14, April.
    2. George A. Akerlof, 2009. "How Human Psychology Drives the Economy and Why It Matters," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 91(5), pages 1175-1175.
    3. Barry Eichengreen, 2008. "Origins and Responses to the Current Crisis," CESifo Forum, ifo Institute - Leibniz Institute for Economic Research at the University of Munich, vol. 9(04), pages 6-11, December.
    4. Shiller Robert J., 2009. "Policies to Deal with the Implosion in the Mortgage Market," The B.E. Journal of Economic Analysis & Policy, De Gruyter, vol. 9(3), pages 1-25, March.
    5. W. Max Corden, 2009. "The World Credit Crisis: Understanding It, and What to Do," The World Economy, Wiley Blackwell, vol. 32(3), pages 385-400, March.
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    Cited by:

    1. Steinar Holden, 2012. "Implications of insights from behavioral economics for macroeconomic models," IMK Working Paper 99-2012, IMK at the Hans Boeckler Foundation, Macroeconomic Policy Institute.
    2. Driscoll, John C. & Holden, Steinar, 2014. "Behavioral economics and macroeconomic models," Journal of Macroeconomics, Elsevier, vol. 41(C), pages 133-147.
    3. Gebhard Kirchgässner, 2014. "On Self-Interest and Greed," CESifo Working Paper Series 4883, CESifo.
    4. Kolev, Kaloyan, 2016. "Глобалната Икономическа Криза И Поведенческият Икономикс [The Global Economic Crisis and Behavioral Economics]," MPRA Paper 114570, University Library of Munich, Germany.
    5. John E. King, 2013. "Should post-Keynesians make a behavioural turn?," European Journal of Economics and Economic Policies: Intervention, Edward Elgar Publishing, vol. 10(2), pages 231-242.
    6. Ian M. Mcdonald, 2010. "Beyond Krugman to Behavioural Keynes," Agenda - A Journal of Policy Analysis and Reform, Australian National University, College of Business and Economics, School of Economics, vol. 17(1), pages 89-94.

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