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Can a drifting into a new economic and financial crisis be averted?

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  • Sebastian Watzka
  • Friedrich Thießen

Abstract

The latest economic data and forecasts point to a return of the recession. Can a drifting into a new economic and financial crisis be prevented? Sebastian Watzka, Ludwig-Maximilian University of Munich, believes that with energetic and credible action by policymakers the existing recession in the euro area can be ended while at the same time supporting the robust German economy. In his view, at least two kinds of “stabilising and stimulating demand policy measures” can be used: investment in promising projects, such as renewable energy, education and transport, and a slight increase of the ECB’s inflation target. For Friedrich Thiessen, Technical University of Chemnitz, the unsustainability of current policy is leading to a gradual worsening of the crisis.

Suggested Citation

  • Sebastian Watzka & Friedrich Thießen, 2011. "Can a drifting into a new economic and financial crisis be averted?," ifo Schnelldienst, ifo Institute - Leibniz Institute for Economic Research at the University of Munich, vol. 64(21), pages 03-10, November.
    • Handle: RePEc:ces:ifosdt:v:64:y:2011:i:21:p:03-10
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    References listed on IDEAS

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    4. Carmen M. Reinhart & Kenneth S. Rogoff, 2014. "This Time is Different: A Panoramic View of Eight Centuries of Financial Crises," Annals of Economics and Finance, Society for AEF, vol. 15(2), pages 215-268, November.
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    More about this item

    JEL classification:

    • E50 - Macroeconomics and Monetary Economics - - Monetary Policy, Central Banking, and the Supply of Money and Credit - - - General
    • G10 - Financial Economics - - General Financial Markets - - - General (includes Measurement and Data)
    • O10 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - General

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