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The financial crisis: a history of the economic schools of thought

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  • Sabina Andreea Cazan

    (“Alexandru Ioan Cuza” University of Iași, Iași, Romania)

Abstract

Crisis is a very important aspect of our everyday life and no matter of the dimension we refer to this represents a period in the evolution of a society marked by great difficulties and anxiety. From an economic point of view this is a normal and necessary event, leading to marvellous growth and development. Even so, the authorities are often not prepared or do not know how to mitigate and manage its shortfalls. The main objective of this paper is to focus around the financial crisis development in the perspective of Classical, Neoclassical and Keynesian economics. Even hundreds years apart, all of the three schools have captured the determinants, implications and some measures to mitigate the imbalances which are still relevant today. The question remains though, so why the world did not resolve the puzzle of financial distress taking into consideration the age of these types of events, the number and the forms they hit our society in the last decades. This study will try to summarize the main ideas of ones of the greatest minds of the past in order to bring some light over the financial crisis phenomena.

Suggested Citation

  • Sabina Andreea Cazan, 2021. "The financial crisis: a history of the economic schools of thought," Journal of Financial Studies, Institute of Financial Studies, vol. 10(6), pages 48-57, May.
    • Handle: RePEc:fst:rfsisf:v:10:y:2021:i:6:p:48-57
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    References listed on IDEAS

    as
    1. Nissaf Ben Ayed & Gérard Mondello, 2015. "The Adam Smith's Banking System: The sources of the analysis of modern banking governance," Post-Print hal-01251667, HAL.
    2. Hyman P. Minsky, 1994. "Financial Instability and the Decline(?) of Banking: Public Policy Implications," Economics Working Paper Archive wp_127, Levy Economics Institute.
    3. Detzer, Daniel & Herr, Hansjörg, 2014. "Theories of financial crises: An overview," IPE Working Papers 32/2014, Berlin School of Economics and Law, Institute for International Political Economy (IPE).
    4. Hugh Rockoff, 2009. "Upon Daedalian Wings of Paper Money: Adam Smith and the Crisis of 1772," NBER Working Papers 15594, National Bureau of Economic Research, Inc.
    5. Stijn Claessens & M. Ayhan Kose, 2013. "Financial Crises: Explanations, Types and Implications," CAMA Working Papers 2013-06, Centre for Applied Macroeconomic Analysis, Crawford School of Public Policy, The Australian National University.
    6. Hugh Rockoff, 2010. "Parallel Journeys: Adam Smith and Milton Friedman on the Regulation of Banking," Departmental Working Papers 201004, Rutgers University, Department of Economics.
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    More about this item

    Keywords

    Financial crisis; classical economics; neoclassical economics; Keynesianism; crisis theory;
    All these keywords.

    JEL classification:

    • A11 - General Economics and Teaching - - General Economics - - - Role of Economics; Role of Economists
    • B12 - Schools of Economic Thought and Methodology - - History of Economic Thought through 1925 - - - Classical (includes Adam Smith)
    • E12 - Macroeconomics and Monetary Economics - - General Aggregative Models - - - Keynes; Keynesian; Post-Keynesian; Modern Monetary Theory
    • G01 - Financial Economics - - General - - - Financial Crises

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