WP 2009-10 After Hubris, Smoke and Mirrors, The Downward Spiral: Financial and real markets pull each other down; how can policy reverse this?
The causes of the present crisis are largely to be found in the unregulated development of new financial products and in the over-expansion of the financial sector, in particular the shadow banking sector, which emerged precisely to avoid regulation. These changes led to lower risk perception, overvaluing of assets, overleveraging, and then to higher actual risk and instability. But the development of this instability, bringing on a crash, has also led to a collapse of the real side of the economy. The authors discuss the new financial arrangements and new types of regulation that are needed to prevent this happening again
|Date of creation:||May 2009|
|Date of revision:|
|Contact details of provider:|| Postal: 6 East 16th Street, New York, NY 10003|
Web page: http://www.economicpolicyresearch.org
More information through EDIRC
When requesting a correction, please mention this item's handle: RePEc:epa:cepawp:2009-10. See general information about how to correct material in RePEc.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Bridget Fisher)
If references are entirely missing, you can add them using this form.