What Have We Learned From the Global Financial Crisis of 2008-09 and its Aftermath?

This article summarizes a number of key lessons from the effects of the global financial crisis that, with the passage of time, are having an important impact on views about global financial stability, macroeconomic theory and policy, income inequality and the role of the international financial architecture (IFA). The crisis followed a period of rapid growth in financial globalization that largely escaped the governing capacity of the IFA and coincided with a benign view of the limited role for government regulation given the self-disciplining power of financial institutions and the inherent stability and self-correcting capacity of capitalist market economies. The crisis has confirmed the important role for government policies in promoting economic recovery and minimizing or reversing the negative distributional effects of the crisis, although little has been done to deal with income inequality. Also, strong intergovernmental coordination has been required to correct major defects in the IFA.