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Anatomy of the 2008 financial crisis: an economic analysis postmortem




This paper summarizes my ideas about the causes of and solutions to the 2008 financial crisis and is intended to be written so that a non-specialist can grasp the content and contribute to the discussion. The first section focuses on the immediate causes of the crisis and the appropriate short-term policy response. The latter section discusses the broader systemic causes of the crisis related to the mechanisms used in the supply of money and credit. The policy recommendations focus on addressing well-known market failures - like the lack of credible public information about the quality of debt instruments - that were exposed as a result of the crisis. Additionally, institutional reforms in the supply of money and credit designed to streamline monetary policy and limit contagion during a banking crisis are suggested.

Suggested Citation

  • Hunter, Greg, 2009. "Anatomy of the 2008 financial crisis: an economic analysis postmortem," Journal of Financial Transformation, Capco Institute, vol. 27, pages 45-48.
  • Handle: RePEc:ris:jofitr:1383

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    References listed on IDEAS

    1. John Williamson, 2000. "The Role of the IMF: A Guide to the Reports," Policy Briefs PB00-5, Peterson Institute for International Economics.
    2. Raffer, Kunibert, 1998. "The tobin tax: Reviving a discussion," World Development, Elsevier, vol. 26(3), pages 529-538, March.
    3. Stanley Fischer, 2001. "Exchange Rate Regimes: Is the Bipolar View Correct?," Journal of Economic Perspectives, American Economic Association, vol. 15(2), pages 3-24, Spring.
    4. Nunnenkamp, Peter, 2002. "IWF und Weltbank: trotz aller Mängel weiterhin gebraucht?," Kiel Discussion Papers 388, Kiel Institute for the World Economy (IfW).
    5. Stephany Griffith-Jones & Stephen Spratt, 2003. "Basel II and Developing Countries: Diversification and Portfolio Effects," FMG Discussion Papers dp437, Financial Markets Group.
    6. Griffith-Jones, Stephany & Segoviano, Miguel Angel & Spratt, Stephen, 2003. "Basel II and developing countries: diversification and portfolio effects," LSE Research Online Documents on Economics 24824, London School of Economics and Political Science, LSE Library.
    7. Nunnenkamp, Peter, 2001. "Umbaupläne und Reparaturarbeiten an der internationalen Finanzarchitektur: eine Zwischenbilanz aus deutscher Perspektive," Kiel Working Papers 1078, Kiel Institute for the World Economy (IfW).
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    Cited by:

    1. Shojai, Shahin & Feiger, George, 2010. "Economists’ hubris – the case of risk management," Journal of Financial Transformation, Capco Institute, vol. 28, pages 27-35.
    2. Demyanyk, Yuliya & Hasan, Iftekhar, 2010. "Financial crises and bank failures: A review of prediction methods," Omega, Elsevier, vol. 38(5), pages 315-324, October.
    3. Shojai, Shahin & Feiger, George & Kumar, Rajesh, 2010. "Economists’ hubris — the case of equity asset management," Journal of Financial Transformation, Capco Institute, vol. 29, pages 9-16.
    4. Shojai, Shahin & Feiger, George, 2011. "Economists’ Hubris – The Case of Award Winning Finance Literature," Journal of Financial Transformation, Capco Institute, vol. 31, pages 9-17.

    More about this item


    Financial crisis; financial institutions;

    JEL classification:

    • G01 - Financial Economics - - General - - - Financial Crises
    • G21 - Financial Economics - - Financial Institutions and Services - - - Banks; Other Depository Institutions; Micro Finance Institutions; Mortgages


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