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Responding to Economic Crises: Policy Alternatives for Equitable Recovery and Development

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  • Stiglitz, Joseph E

Abstract

While economic crises are becoming more frequent and severe, our experience in East Asia has demonstrated how the international response to these crises remains inadequate. Appropriate policy responses to economic crises entail three essential dimensions: first, the maintenance of full employment and economic stability through macroeconomic policy; second, complementary structural policy aimed at restoring confidence; and finally, a robust social safety net to mitigate the adverse and potentially long-term effects of economic downturns. A suitable crisis response requires that policy-makers recognize the critical role of financial markets and the existence of time lags. Suitable policy responses should consider not only an individual economy's ability to absorb shocks, but also the asymmetries and nonlinearities of alternative policies. As we thus seek to improve our macroeconomic and structural policies for the future prevention and mitigation of crises, it is critical that we bear in mind the protection of the most vulnerable segments of society from the crises that will inevitably occur. Copyright 1999 by Blackwell Publishers Ltd and The Victoria University of Manchester

Suggested Citation

  • Stiglitz, Joseph E, 1999. "Responding to Economic Crises: Policy Alternatives for Equitable Recovery and Development," Manchester School, University of Manchester, vol. 67(5), pages 409-427, Special I.
  • Handle: RePEc:bla:manchs:v:67:y:1999:i:5:p:409-27
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    Cited by:

    1. Fabrice Capoen & Jérôme Creel & Pascal Cussy & Hélène Lenoble-Liaud, 2000. "How to manage speculative shocks : intra-european vs. international monetary coordination," Sciences Po publications N° 2000-01, Sciences Po.
    2. Makkonen, Teemu, 2013. "Government science and technology budgets in times of crisis," Research Policy, Elsevier, vol. 42(3), pages 817-822.
    3. Bernd Hayo & Doh Shin, 2002. "Mass Attitudes Toward Financial Crisis and Economic Reform in Korea," Development and Comp Systems 0205003, EconWPA.
    4. J. Barkley Rosser, 2003. "A Nobel Prize for Asymmetric Information: The economic contributions of George Akerlof, Michael Spence and Joseph Stiglitz," Review of Political Economy, Taylor & Francis Journals, vol. 15(1), pages 3-21.
    5. Hutchison, Michael M. & Noy, Ilan & Wang, Lidan, 2010. "Fiscal and monetary policies and the cost of sudden stops," Journal of International Money and Finance, Elsevier, vol. 29(6), pages 973-987, October.
    6. Kirkpatrick, Colin & Tennant, David, 2002. "Responding to Financial Crisis: The Case of Jamaica," World Development, Elsevier, vol. 30(11), pages 1933-1950, November.
    7. Roger Kelly & George Mavrotas, 2002. "Savings and Financial Sector Development: Panel Cointegration Evidence from Africa," 10th International Conference on Panel Data, Berlin, July 5-6, 2002 A4-2, International Conferences on Panel Data.
    8. Mavrotas, George & Vinogradov, Dmitri, 2005. "Financial Sector Structure and Financial Crisis Burden: A Model Based on the Russian Default of 1998," WIDER Working Paper Series DP2005/09, World Institute for Development Economic Research (UNU-WIDER).
    9. Bhalotra, Sonia, 2010. "Fatal fluctuations? Cyclicality in infant mortality in India," Journal of Development Economics, Elsevier, vol. 93(1), pages 7-19, September.
    10. Nielsen, Ingrid & Nyland, Chris & Smyth, Russell & Zhu, Cherrie, 2005. "Marketization and perceptions of social protection in China's cities," World Development, Elsevier, vol. 33(11), pages 1759-1781, November.
    11. Mavrotas, George & Vinogradov, Dmitri, 2007. "Financial sector structure and financial crisis burden," Journal of Financial Stability, Elsevier, vol. 3(4), pages 295-323, December.
    12. Jonathan M. Harris, "undated". "01-09 "Macroeconomic Policy and Sustainability"," GDAE Working Papers 01-09, GDAE, Tufts University.
    13. Mah, Jai S., 2006. "Economic restructuring in post-crisis Korea," Journal of Behavioral and Experimental Economics (formerly The Journal of Socio-Economics), Elsevier, vol. 35(4), pages 682-690, August.
    14. Kelly, Roger & Mavrotas, George, 2003. "Savings and Financial Sector Development: Panel Cointegration Evidence from Africa," WIDER Working Paper Series 012, World Institute for Development Economic Research (UNU-WIDER).
    15. Jai S. Mah, 2003. "The Restructuring in the Post-Crisis Korean Economy," Working papers 2003-46, University of Connecticut, Department of Economics.
    16. Creel, Jerome & Capoen, Fabrice & Cussy, Pascal & Lenoble-Liaud, Helene, 2003. "How to manage financial shocks: Intra-European vs. international monetary coordination," Journal of Macroeconomics, Elsevier, vol. 25(4), pages 431-455, December.

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