The 2008 Global Economic Crisis and Public Expenditure: A Critical Review of the Literature

The United States of America subprime mortgage market precipitated the occurrence of the 2008 global economic crisis that has made financial disruptions the world over. Therefore there has been the need to evaluate the extent to which this crisis affected economies globally. Hence, the effect of the 2008 global economic crisis on public expenditure was reviewed. The paper concludes that economies whose public expenditures were significantly affected by the crisis were those closely integrated to the US financial markets, those with imprudent macroeconomic measures at the pre-crisis period and those with a high level of export dependence. Also the interrelation between macroeconomic factors and public expenditure as influenced by economic policy indicates that the crisis caused the macroeconomic factors to deteriorate. Hence this led to governments adopting economic policy measures that could curtail the crisis effect on public expenditure.