IDEAS home Printed from https://ideas.repec.org/p/eei/rpaper/eeri_rp_2008_17.html
   My bibliography  Save this paper

Behind the 2008 Capital Market Collapse

Author

Listed:
  • C-René Dominique

Abstract

Greed and the unethical behavior of financial institutions obviously played a part in the collapse of the world capital market in 2008. But, this paper argues that the main culprits are the neo-liberal ideology (requiring ever smaller gov-ernments and privatization) and the flawed theories of risk assessment. It also finds that given the fact that market economies are fractal structures, the objective assessment and / or the quantification of risks is not even possible. It concludes with some recommendations as to how to avoid future collapses.

Suggested Citation

  • C-René Dominique, 2008. "Behind the 2008 Capital Market Collapse," EERI Research Paper Series EERI_RP_2008_17, Economics and Econometrics Research Institute (EERI), Brussels.
    • Handle: RePEc:eei:rpaper:eeri_rp_2008_17
    as

    Download full text from publisher

    File URL: http://www.eeri.eu/documents/wp/EERI_RP_2008_17.pdf
    Download Restriction: no
    ---><---

    References listed on IDEAS

    as
    1. Christina D. Romer, 1999. "Changes in Business Cycles: Evidence and Explanations," Journal of Economic Perspectives, American Economic Association, vol. 13(2), pages 23-44, Spring.
    2. Rothschild, Michael & Stiglitz, Joseph E., 1971. "Increasing risk II: Its economic consequences," Journal of Economic Theory, Elsevier, vol. 3(1), pages 66-84, March.
    3. Sheffrin, Steven M., 1988. "Have economic fluctuations been dampened? : A look at evidence outside the United States," Journal of Monetary Economics, Elsevier, vol. 21(1), pages 73-83, January.
    Full references (including those not matched with items on IDEAS)

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Bernhard Felderer, 2001. "Why do the long-term growth and productivity trends of Europe and the US differ?," ifo Schnelldienst, ifo Institute - Leibniz Institute for Economic Research at the University of Munich, vol. 54(01), pages 15-23, March.
    2. Keating, John W. & Valcarcel, Victor J., 2017. "What's so great about the Great Moderation?," Journal of Macroeconomics, Elsevier, vol. 51(C), pages 115-142.
    3. Nocetti, Diego C., 2013. "The LeChatelier principle for changes in risk," Journal of Mathematical Economics, Elsevier, vol. 49(6), pages 460-466.
    4. Elizabeth M. Caucutt & Lance Lochner & Youngmin Park, 2017. "Correlation, Consumption, Confusion, or Constraints: Why Do Poor Children Perform so Poorly?," Scandinavian Journal of Economics, Wiley Blackwell, vol. 119(1), pages 102-147, January.
    5. Stavros Panageas & Nicolae Garleanu, 2008. "Yooung, Old, Conservative and Bold: The implications of finite lives and heterogeneity for asset prices," 2008 Meeting Papers 409, Society for Economic Dynamics.
    6. Tae-Jeong Kim & Mihye Lee & Robert Dekle, 2014. "The Impact of Population Aging on the Countercyclical Fiscal Stance in Korea, with a Focus on the Automatic Stabilizer," Working Papers 2014-21, Economic Research Institute, Bank of Korea.
    7. Cerreia-Vioglio, Simone & Maccheroni, Fabio & Marinacci, Massimo & Montrucchio, Luigi, 2012. "Probabilistic sophistication, second order stochastic dominance and uncertainty aversion," Journal of Mathematical Economics, Elsevier, vol. 48(5), pages 271-283.
    8. Kiyohiko G. Nishimura & Hiroyuki Ozaki, 2001. "Search under the Knightian Uncertainty," CIRJE F-Series CIRJE-F-112, CIRJE, Faculty of Economics, University of Tokyo.
    9. Baker, Erin, 2005. "Uncertainty and learning in a strategic environment: global climate change," Resource and Energy Economics, Elsevier, vol. 27(1), pages 19-40, January.
    10. Jang Ok Cho & Hyo-Youn Chu & Hyung Seok E. Kim & Jaywon Lee, 2016. "Productivity Distribution and Economic Growth," Korean Economic Review, Korean Economic Association, vol. 32, pages 23-40.
    11. Eeckhoudt, Louis & Schlesinger, Harris, 2008. "Changes in risk and the demand for saving," Journal of Monetary Economics, Elsevier, vol. 55(7), pages 1329-1336, October.
    12. Christian Gollier & James Hammitt & Nicolas Treich, 2013. "Risk and choice: A research saga," Journal of Risk and Uncertainty, Springer, vol. 47(2), pages 129-145, October.
    13. Chamorro Elosua, Arritokieta & Usategui Díaz de Otalora, José María, 2013. "A Note on Risk Acceptance, Bankruptcy Avoidance and Riskiness Measures," DFAEII Working Papers 1988-088X, University of the Basque Country - Department of Foundations of Economic Analysis II.
    14. repec:dau:papers:123456789/11094 is not listed on IDEAS
    15. Raymond H. Chan & Ephraim Clark & Xu Guo & Wing-Keung Wong, 2020. "New development on the third-order stochastic dominance for risk-averse and risk-seeking investors with application in risk management," Risk Management, Palgrave Macmillan, vol. 22(2), pages 108-132, June.
    16. Michèle Cohen & Isaac Meilijson, 2011. "In search of characterization of the preference for safety under the Choquet model," Post-Print halshs-00594082, HAL.
    17. Terrance Hurley & Jawoo Koo & Kindie Tesfaye, 2018. "Weather risk: how does it change the yield benefits of nitrogen fertilizer and improved maize varieties in sub‐Saharan Africa?," Agricultural Economics, International Association of Agricultural Economists, vol. 49(6), pages 711-723, November.
    18. Alexander Reisz, 1999. "Temporal Resolution of Uncertainty, the Investment Policy of Levered Firms and Corporate Debt Yields," New York University, Leonard N. Stern School Finance Department Working Paper Seires 99-044, New York University, Leonard N. Stern School of Business-.
    19. Saïd Hanchane & Abraham Lioui & David Touahri, 2006. "Human capital as a risky asset and the effect of uncertainty on the decision to invest," Working Papers halshs-00010139, HAL.
    20. Hoy, Michael & Huang, Rachel J., 2017. "Measuring discrimination using principles of stochastic dominance," Journal of Economic Theory, Elsevier, vol. 167(C), pages 39-52.
    21. J. Bradford DeLong, 2002. "Do We Have a "New" Macroeconomy?," NBER Chapters, in: Innovation Policy and the Economy, Volume 2, pages 163-184, National Bureau of Economic Research, Inc.

    More about this item

    Keywords

    Efficiency and self-correction in market economies; Linear-positive and non-linear modelings; creative destruction of coefficients; determinism and randomness; and risk assessment.;
    All these keywords.

    JEL classification:

    • E22 - Macroeconomics and Monetary Economics - - Consumption, Saving, Production, Employment, and Investment - - - Investment; Capital; Intangible Capital; Capacity

    NEP fields

    This paper has been announced in the following NEP Reports:

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:eei:rpaper:eeri_rp_2008_17. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Julia van Hove (email available below). General contact details of provider: https://edirc.repec.org/data/eeriibe.html .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.