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Who Is To Blame for the Great Recession?

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  • Grubel, Herbert

Abstract

This paper uses empirical information and economic theory to show that the primary causes of the Great Recession of 2008 were the non-market policies of China and energy producing countries, which resulted in the current account imbalances that existed before the recession began. The savings of these countries did not have the normal beneficial effects on global interest rates and investment because they were used to buy only US debt instruments and none of other developed countries. This asymmetric effect was the result of the fixed exchange rate, which the surplus countries maintained against the dollar and not against other currencies that otherwise might have shared the burden of absorbing the high levels of savings.

Suggested Citation

  • Grubel, Herbert, 2010. "Who Is To Blame for the Great Recession?," The Journal of Economic Asymmetries, Elsevier, vol. 7(2), pages 171-186.
    • Handle: RePEc:eee:joecas:v:7:y:2010:i:2:p:171-186
    DOI: 10.1016/j.jeca.2010.02.008
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    More about this item

    Keywords

    F32; F34; Great Recession; Chinese non-market policies; current account imbalances; fixed dollar rate; energy-producing countries;
    All these keywords.

    JEL classification:

    • F32 - International Economics - - International Finance - - - Current Account Adjustment; Short-term Capital Movements
    • F34 - International Economics - - International Finance - - - International Lending and Debt Problems

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