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Multiple Choices: Economic Policies in Crisis

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  • Daniel Heymann

    (Instituto Interdisciplinario de Economía Política - UBA - CONICET)

  • Axel Leijonhufvud

    (UCLA y Universitá di Trento)

Abstract

Macroeconomic crises frustrate expectations, threaten the fulfillment of contractual promises and force dramatic revisions of living standards and wealth perceptions. They belong to a family of memorable episodes that leave traces in economic behavior and performance for a long time. But all crises have their own idiosyncrasies. When it comes to policies, the particularities matter and are often essential. Of particular importance are the balance sheets and cash flows of the major sectors, including governments and the central bank. In this paper we review policy options after the fact, according to the types and the intensities of the disturbances. We explore possibilities and limitations of monetary instruments, fiscal policies and debt restructurings, depending on conditions such as levels of public and private indebtedness and the degree of segmentation of credit markets. It also addresses preventive policies, including macro management, regulation, and measures to modify incentives, especially in the financial sector.

Suggested Citation

  • Daniel Heymann & Axel Leijonhufvud, 2013. "Multiple Choices: Economic Policies in Crisis," Documentos de trabajo del Instituto Interdisciplinario de Economía Política IIEP (UBA-CONICET) 2013-1, Universidad de Buenos Aires, Facultad de Ciencias Económicas, Instituto Interdisciplinario de Economía Política IIEP (UBA-CONICET).
    • Handle: RePEc:ake:iiepdt:20131
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    References listed on IDEAS

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    Cited by:

    1. Daniel Heymann & Paulo Daniel Pascuini, 2018. "On The (In)Consistency of Re Modeling," Documentos de trabajo del Instituto Interdisciplinario de Economía Política IIEP (UBA-CONICET) 2018-28, Universidad de Buenos Aires, Facultad de Ciencias Económicas, Instituto Interdisciplinario de Economía Política IIEP (UBA-CONICET).
    2. Ricardo Crespo & Daniel Heymann & Pablo Schiaffino, 2015. "Dealing with uncertainty evolving beliefs, rationalizations & the origins of economic crises," Documentos de trabajo del Instituto Interdisciplinario de Economía Política IIEP (UBA-CONICET) 2015-8, Universidad de Buenos Aires, Facultad de Ciencias Económicas, Instituto Interdisciplinario de Economía Política IIEP (UBA-CONICET).

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    More about this item

    Keywords

    Macroeconomic crises; Wealth perceptions; Web of contracts; Liquidity; Fiscal policy; Debt restructuring; Policy reform;
    All these keywords.

    JEL classification:

    • E00 - Macroeconomics and Monetary Economics - - General - - - General
    • E32 - Macroeconomics and Monetary Economics - - Prices, Business Fluctuations, and Cycles - - - Business Fluctuations; Cycles
    • E44 - Macroeconomics and Monetary Economics - - Money and Interest Rates - - - Financial Markets and the Macroeconomy
    • E52 - Macroeconomics and Monetary Economics - - Monetary Policy, Central Banking, and the Supply of Money and Credit - - - Monetary Policy
    • E62 - Macroeconomics and Monetary Economics - - Macroeconomic Policy, Macroeconomic Aspects of Public Finance, and General Outlook - - - Fiscal Policy; Modern Monetary Theory

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