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The Global Financial Crisis of 2008-10: A View from the Social Sectors

  • Sara Guerschanik Calvo

    ()

    (School of International and Public Affairs (SIPA), Columbia University)

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    The impact of the US financial crisis that unfolded in 2008 has been global. It was felt in output, trade, and cross-border capital flows and transfers. Incomes have dropped and consumption patterns are changing, placing at risk the human development gains of the 1990s. At the heart of this global crisis is a credit crunch that has put financial strains on firms and individuals and has led to a large number of job losses and drops in income from other sources. Having learned the lessons from past financial crises, some countries were well prepared and, with support from the international financial community, lessened the impact of the crisis. Still, current estimates about the impact of the Crisis are staggering. But country experiences show that in the past there have been huge overestimates of the impact on human development indicators that may be the case again now. The high share of developing-country exports in total exports to advanced countries and the high number of women—pivotal in child development--in developing country-export sectors, make focusing on national and global actions conducive to restore world credit a priority for policymakers. High on the action list is restoring credibility in financial markets, making credit accessible to small businesses that account for a large share of employment globally, strengthening the absorptive capacity of public spending, and expanding social protection programs. This paper is a compilation of selected literature on the impact of financial crisis on jobs, other sources of private income and public social spending and on human development. The paper uses the bank run and sudden stop framework of financial-crisis analysis, discusses country cases, and summarizes the lessons learned from current as well as past crises to prevent loosing sources of income.

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    File URL: http://hdr.undp.org/en/reports/global/hdr2010/papers/HDRP_2010_18.pdf
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    Paper provided by Human Development Report Office (HDRO), United Nations Development Programme (UNDP) in its series Human Development Research Papers (2009 to present) with number HDRP-2010-18.

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    Length: 69 pages
    Date of creation: Jul 2010
    Date of revision:
    Publication status: Published as background research for the 2010 Human Development Report.
    Handle: RePEc:hdr:papers:hdrp-2010-18
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    1. Ricardo Caballero G. & Eduardo Engel G. & Alejandro Micco A., 2004. "Microeconomic Flexibility in Latin America," Journal Economía Chilena (The Chilean Economy), Central Bank of Chile, vol. 7(2), pages 5-26, August.
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    6. Sinn, Hans-Werner, 2009. "Shock Producers and Shock Absorbers in the Crisis," Munich Reprints in Economics 19634, University of Munich, Department of Economics.
    7. Aizenman, Joshua & Marion, Nancy, 2009. "Using Inflation to Erode the U.S. Public Debt," Santa Cruz Department of Economics, Working Paper Series qt6xf174rs, Department of Economics, UC Santa Cruz.
    8. Sebastian Edwards, 2009. "Latin America's Decline: A Long Historical View," NBER Working Papers 15171, National Bureau of Economic Research, Inc.
    9. Friedman, Jed & Schady, Norbert, 2009. "How many more infants are likely to die in Africa as a result of the global financial crisis ?," Policy Research Working Paper Series 5023, The World Bank.
    10. Dang, Hai-Anh & Knack, Stephen & Rogers, F. Halsey, 2013. "International aid and financial crises in donor countries," European Journal of Political Economy, Elsevier, vol. 32(C), pages 232-250.
    11. Graciela L. Kaminsky & Carmen M. Reinhart & Carlos A. Vegh, 2004. "When it Rains, it Pours: Procyclical Capital Flows and Macroeconomic Policies," NBER Working Papers 10780, National Bureau of Economic Research, Inc.
    12. Frankel, Jeffrey & Cavallo, Eduardo, 2004. "Does Openness to Trade Make Countries More Vulnerable to Sudden Stops, or Less? Using Gravity to Establish Causality," Working Paper Series rwp04-038, Harvard University, John F. Kennedy School of Government.
    13. Guillermo A. Calvo & Alejandro Izquierdo & Luis Fernando Mejía, 2004. "On the Empirics of Sudden Stops: The Relevance of Balance-Sheet Effects," IDB Publications (Working Papers) 6516, Inter-American Development Bank.
    14. Arbache, Jorge Saba & Page, John, 2007. "More growth or fewer collapses ? a new look at long run growth in Sub-Saharan Africa," Policy Research Working Paper Series 4384, The World Bank.
    15. Guillermo A. Calvo, 2009. "FINANCIAL CRISES AND LIQUIDITY SHOCKS: A Bank-Run Perspective," NBER Working Papers 15425, National Bureau of Economic Research, Inc.
    16. Guillermo A. Calvo, 2006. "Monetary Policy Challenges in Emerging Markets: Sudden Stop, Liability Dollarization, and Lender of Last Resort," IDB Publications (Working Papers) 6841, Inter-American Development Bank.
    17. Olivier Blanchard & Giovanni Dell'Ariccia & Paolo Mauro, 2010. "Rethinking Macroeconomic Policy," Journal of Money, Credit and Banking, Blackwell Publishing, vol. 42(s1), pages 199-215, 09.
    18. Reinhart, Carmen & Vegh, Carlos & Velasco, Andres, 2008. "Money, Crises, and Transition Essays in Honor of Guillermo A. Calvo: An Introduction," MPRA Paper 13232, University Library of Munich, Germany.
    19. Moritz Schularick & Alan M. Taylor, 2012. "Credit Booms Gone Bust: Monetary Policy, Leverage Cycles, and Financial Crises, 1870-2008," American Economic Review, American Economic Association, vol. 102(2), pages 1029-61, April.
    20. Enrique G. Mendoza & Marco E. Terrones, 2008. "An Anatomy Of Credit Booms: Evidence From Macro Aggregates And Micro Data," NBER Working Papers 14049, National Bureau of Economic Research, Inc.
    21. Markus K. Brunnermeier, 2008. "Deciphering the Liquidity and Credit Crunch 2007-08," NBER Working Papers 14612, National Bureau of Economic Research, Inc.
    22. Carmen M. Reinhart & Kenneth S. Rogoff, 2009. "This Time Is Different: Eight Centuries of Financial Folly," Economics Books, Princeton University Press, edition 1, volume 1, number 8973.
    23. Maureen Lewis & Marijn Verhoeven, 2010. "Financial Crises and Social Spending," World Economics, World Economics, Economic & Financial Publishing, 1 Ivory Square, Plantation Wharf, London, United Kingdom, SW11 3UE, vol. 11(4), pages 79-110, October.
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