The ‘Great Financial Crisis’ and the ‘Great Recession’: Origins and Economic Policy Implications

Distinguished Professorial Address: Professor Philip Arestis

 

Abstract

We locate the main causes of the recent financial crisis on three factors. Two of them were the financial liberalisation and the distributional effects (redistribution from wage earners to the financial sector) in the US, and elsewhere. Both these factors gave great strides in the development and extension of new forms of securitisation and use of derivatives.

This was a financial engineering practice, the third main factor, which led to the growth of the instruments labelled as collateralised debt obligations, especially so in the form of collateralised mortgages.

There were also three contributory factors, which were accentuating the process of the main causes: the international imbalances, mainly as a result of the growth of China; the monetary policy pursued by countries over the period leading to the crisis; and the role played by the credit rating agencies. We discuss the economic policy implications of the financial crisis before we summarise and conclude.

Speaker Biography:

Philip Arestis is Professor and Honorary Senior Departmental Fellow; Director of Research, Cambridge Centre for Economics and Public Policy, Department of Land Economy, University of Cambridge, UK; Emeritus Fellow Wolfson College; Professor of Economics, Department of Applied Economics V, University of the Basque Country, Spain; Distinguished Adjunct Professor of Economics, Department of Economics, University of Utah, US; Research Associate, Levy Economics Institute, New York, US; Visiting Professor, Leeds Business School, University of Leeds, UK (2003-2015); Professorial Research Associate, Department of Finance and Management Studies, School of Oriental and African Studies (SOAS), University of London, UK (2003-2010).

He is holder of the British Hispanic Foundation 'Queen Victoria Eugenia' British Hispanic Chair of Doctoral Studies, and has been awarded ‘homage’ by the Brazilian Keynesian Association (AKB) for his contribution to the spread of Keynesianism in Brazil.

He was Chief Academic Adviser to the UK Government Economic Service (GES) on Professional Developments in Economics (2005-2013). AcSS award of Academician of the Academy of Social Sciences for contributions to Social Science (September 2012 to July 2014).

After July 2014 changed to FAcSS (Fellow of the Academy of Social Sciences). He has published as sole author or editor, as well as co-author and co-editor, a number of books, contributed in the form of invited chapters to numerous books, produced research reports for research institutes, and has published widely in academic journals

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