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The Great Recession: on the Ineffectiveness of Domestic Adjustment Policies and the Need of Multilateral Arrangements

Author

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  • Jorge Rojas

    ( Departamento de Economía - Pontificia Universidad Católica del Perú)

Abstract

The Great Recession is the manifestation of some fundamental problems in the real sector of the global economy, related basically to the loss of competitiveness of the U.S. and other central economies reflected in continuous external disequilibria in the form of parallel current account deficits and financial account surpluses. Domestic monetary and fiscal (or domestic adjustment) policies are not working because we are dealing with a global problem that requires multilateral solutions allowing the adjustment of some fundamental relative prices and the closing of some key structural imbalances in order to make a sustainable recovery possible. Besides, the difficulties in finding and engineering a solution show the need to reassess the theoretical paradigms underlying the economic policies preceding the current crisis (e.g., supply-side economics). JEL Classification-JEL: E52, E62, F31, F33, F62, G01.

Suggested Citation

  • Jorge Rojas, 2014. "The Great Recession: on the Ineffectiveness of Domestic Adjustment Policies and the Need of Multilateral Arrangements," Documentos de Trabajo / Working Papers 2014-381, Departamento de Economía - Pontificia Universidad Católica del Perú.
    • Handle: RePEc:pcp:pucwps:wp00381
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    File URL: http://files.pucp.edu.pe/departamento/economia/DDD381.pdf
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    References listed on IDEAS

    as
    1. Reinhart, Karmen & Rogoff, Kenneth, 2009. ""This time is different": panorama of eight centuries of financial crises," Ekonomicheskaya Politika / Economic Policy, Russian Presidential Academy of National Economy and Public Administration, vol. 1, pages 77-114, March.
    2. Carmen M. Reinhart & Kenneth S. Rogoff, 2014. "This Time is Different: A Panoramic View of Eight Centuries of Financial Crises," Annals of Economics and Finance, Society for AEF, vol. 15(2), pages 215-268, November.
    3. Carmen M. Reinhart & Kenneth S. Rogoff, 2011. "From Financial Crash to Debt Crisis," American Economic Review, American Economic Association, vol. 101(5), pages 1676-1706, August.
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    More about this item

    Keywords

    Monetary Policy; Fiscal Policy; Exchange Rates; Globalization; Financial Crisis.;
    All these keywords.

    JEL classification:

    • 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
    • F31 - International Economics - - International Finance - - - Foreign Exchange
    • F33 - International Economics - - International Finance - - - International Monetary Arrangements and Institutions
    • F62 - International Economics - - Economic Impacts of Globalization - - - Macroeconomic Impacts
    • G01 - Financial Economics - - General - - - Financial Crises

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