by From Constantine Passaris and the current issue of the RWER The Great Recession commenced during the second decade of the new millennium. It was triggered by the global financial crisis of 2008 and developed in its aftermath. I believe the Great Recession is an important economic governance milepost. To my way of thinking the Great Recession is the defining economic event that revealed the fault lines in economic governance and the dysfunctional nature of our economic policy tool kit for the 21st century. In effect, our inherited economic governance model had developed structural deficiencies and public policy shortcomings (Passaris, 2015B). Furthermore, the Great Recession was a tangible acknowledgement that the economic governance landscape was no longer an effective mechanism for
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from Constantine Passaris and the current issue of the RWER
The Great Recession commenced during the second decade of the new millennium. It was triggered by the global financial crisis of 2008 and developed in its aftermath. I believe the Great Recession is an important economic governance milepost. To my way of thinking the Great Recession is the defining economic event that revealed the fault lines in economic governance and the dysfunctional nature of our economic policy tool kit for the 21st century. In effect, our inherited economic governance model had developed structural deficiencies and public policy shortcomings (Passaris, 2015B).
Furthermore, the Great Recession was a tangible acknowledgement that the economic governance landscape was no longer an effective mechanism for delivering the desired outcomes for the new economy. Indeed, it served as a wakeup call that the economic policies that were effective in the old economy of the 20th century are no longer potent for the new economy of the 21st century.
This new term, the Great Recession, is an informative play on words on the Great Depression. The Great Depression lasted for about a decade during the 1930s. It was a period of protracted economic downturn, high inflation, soaring unemployment, stagnant income levels and a decline in total output.
On the other hand, the Great Recession got branded as such because it did not neatly comply with the definition of a depression which requires four consecutive quarters of negative economic growth. The intermittent spurts of weak economic growth recorded during the period of the Great Recession disqualified it from meeting the definitional parameters of an economic depression. However, in terms of its longevity and severity the Great Recession matches the fundamental economic malaise that was triggered by the Great Depression. In effect, the Great Recession that commenced during the late-2000s was the worst economic downturn since the Great Depression. The parallels and similarities between the Great Depression and the Great Recession are striking.
The Great Recession provided a reality test for economists regarding economic governance and policy. It underlined the need to redesign economic governance in order to address structural change at the same time as initiating economic policies to combat economic adversity.
More specifically, it revealed that the mainstream economic policy tool kit was no longer potent or effective in the new economy. The reason being that the structural parameters of the economic landscape had changed so profoundly and deeply that conventional policies had become an anachronism. In short, the mainstream theories, models and policies had lost their best before date. read more