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What Caused the Great Recession?

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  • Homburg Stefan

    (School of Economics and Management, Leibniz University of Hannover, Germany)

Abstract

This paper examines five possible explanations for the Great Recession of 2008 and 2009, using data for the United States and the eurozone. Of these five hypotheses, four are not supported by the data, while the fifth appears reasonable.

Suggested Citation

  • Homburg Stefan, 2015. "What Caused the Great Recession?," Review of Economics, De Gruyter, vol. 66(1), pages 1-12, April.
  • Handle: RePEc:lus:reveco:v:66:y:2015:i:1:p:1-12
    DOI: 10.1515/roe-2015-0102
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    References listed on IDEAS

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    1. Iyer, Rajkamal & Da-Rocha-Lopes, Samuel & Peydró, José-Luis & Schoar, Antoinette, 2014. "Interbank Liquidity Crunch and the Firm Credit Crunch: Evidence from the 2007-2009 Crisis," EconStor Open Access Articles, ZBW - Leibniz Information Centre for Economics, pages 347-372.
    2. David Colander & Peter Howitt & Alan Kirman & Axel Leijonhufvud & Perry Mehrling, 2018. "Beyond DSGE Models: Toward an Empirically Based Macroeconomics," Chapters, in: How Economics Should Be Done, chapter 14, pages 212-216, Edward Elgar Publishing.
    3. Armen A. Alchian, 1950. "Uncertainty, Evolution, and Economic Theory," Journal of Political Economy, University of Chicago Press, vol. 58, pages 211-211.
    4. Ivashina, Victoria & Scharfstein, David, 2010. "Bank lending during the financial crisis of 2008," Journal of Financial Economics, Elsevier, vol. 97(3), pages 319-338, September.
    5. Gern, Klaus-Jürgen & Jannsen, Nils, 2009. "Do we face a credit crunch?," Open Access Publications from Kiel Institute for the World Economy 32979, Kiel Institute for the World Economy (IfW).
    6. Peter N. Ireland, 2011. "A New Keynesian Perspective on the Great Recession," Journal of Money, Credit and Banking, Blackwell Publishing, vol. 43(1), pages 31-54, February.
    7. Markus K. Brunnermeier, 2009. "Deciphering the Liquidity and Credit Crunch 2007-2008," Journal of Economic Perspectives, American Economic Association, vol. 23(1), pages 77-100, Winter.
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    More about this item

    Keywords

    Financial crisis; Great Recession; wealth effect; credit crunch; money demand; central bank;
    All these keywords.

    JEL classification:

    • E3 - Macroeconomics and Monetary Economics - - Prices, Business Fluctuations, and Cycles
    • E4 - Macroeconomics and Monetary Economics - - Money and Interest Rates
    • G1 - Financial Economics - - General Financial Markets

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