The multifaceted and massive policy responses to the Great Recession and financial crisis eliminated dramatically the length and severity of the meltdown that started in September 2008, its effects on unemployment, jobs, budget deficits, and today’s global economy.
We estimate that:
- The decline in GDP (gross domestic product) that was over 4% will be close to 14%.
- The economy contracted for more than 3 years more than 2 times.
- Over 17 million jobs were lost.
- The rate of unemployment began to be 16%.
- The budget deficit has boosted to 20%+ of the GDP.
We might estimate that according to the financial and fiscal responses of policymakers, the exact GDP was 16.3% bigger in 2011 than it might have been. The unemployment rate was 7% lower than it would have been. In the United States, there was a real financial crisis if it comes to real estate, credit crunch, and the biggest banking interest rates in the short term. The housing market was in the shallow if it comes to the banking systems, the house prices really were too affordable before the crisis. Stock markets were crushed, in figurative language.
Some of the policy responses aspects splendidly worked while the others did not. The vast majority of policy responses have been controversial at the time, remaining so in retrospect. Specific financial responses have been unpopular deeply.
However, such unpopular responses had a bigger combined impact on jobs and growth if compared to fiscal interventions. The Federal Reserve initiatives, financial interventions, the 2009 Recovery Act and more had a resounding success.
Our findings have had necessary implications for the way policymakers must respond to the next financial crisis that will occur inevitably since crises are inherent financial system parts.
- It is normal that policymakers employ the “macroprudential tools” before the upcoming financial crisis to minimize or avoid asset bubbles and the boosted leverage which are the financial catastrophes fodder.
- As soon as financial panic comes, regulators must be as consistent as it is possible in their responses to troublesome financial institutions, making sure that creditors are aware of where their investments stand and therefore, do not run to dump them if good times give way to bad ones.
- Policymakers must not respond to each financial event. however, they must respond in an aggressive way to potential crises. The bigger the uncertainty is, the more they must err on the bigger response side.
- Policymakers must recognize that the initial step in fighting a crisis is to make the financial system stable since, with no credit, the real economy might suffocate despite any other policy response.
- To reduce moral hazard, the companies’ bailouts must be avoided. If it is impossible to avoid them, shareholders must take whatever losses the doles of the market out and creditors must be heavily penalized. Moreover, taxpayers must be made ultimately financially whole. Also, better communication with the public must be treated as an integral part of any kind of bailout operation.
- Since monetary and fiscal policy interactions are big, policymakers must utilize a “2-handed approach” to fight recessions. If it is possible, they must choose specific fiscal and monetary tools that reinforce each other.
- Since conventional monetary policy might be insufficient to cure or forestall a severe recession, policymakers must be open to supplementing of conventional monetary policy with the unconventional monetary policies.
- Discretionary fiscal policy that used to be a standard way to resist recessions since the Great Depression, is remaining an efficient method to do so. The stimulus size must be proportionate to the expected decline magnitude in economic activity.
- Policymakers must not move the fiscal policy from the stimulus to austerity till the financial system will be stable clearly and the economy will be enjoying the self-sustaining growth.
How to write the best financial crisis research paper?
Writing a financial crisis research paper, you should take all the information mentioned above into consideration. analyze it and make your own conclusions. When you will be composing your research paper on the financial crisis, do not forget to take into account the current state of the economy in the world and compare it with the state in 2008. Note that a good global financial crisis research paper must include the facts from the past and use the current data about the economy.
Parts of the proper financial crisis research paper
Every good essay must consist of three main parts. these are the introduction, main body, and conclusion. When you generate the initial part, you should create a strong hook to grab your reader’s attention and motivate him or her to read on. The second part includes a few (3-5) body paragraphs, each beginning with a topic sentence. Make sure your research paper features a good conclusion. The conclusion must contain the summary, analysis, and evaluation of the main facts with no new information added.
All things considered, there are two main ways of composing the essay. the first one is more troublesome that is writing the essay yourself. The second one is much more convenient and is through ordering a paper online. So make up your mind now which way to choose.