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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. Copyright (c) 2009 The Economic Society of Australia.

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
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    References listed on IDEAS

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    1. 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(4), pages 6-11, December.
    2. 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.
    3. 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(1), pages 3-14, April.
    4. W. Max Corden, 2008. "The World Credit Crisis: Understanding It, and What To Do," Melbourne Institute Working Paper Series wp2008n25, Melbourne Institute of Applied Economic and Social Research, The University of Melbourne.
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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. 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.
    4. 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.
    5. Gebhard Kirchgässner, 2014. "On Self-Interest and Greed," CESifo Working Paper Series 4883, CESifo Group Munich.

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