The Return of Depression Economics and the Crisis of 2008 (in English)
Reviewer: Muhammad Mahmood
Paul Krugman is an economics professor at Princeton University and Nobel Prize winner for Economics in 2008. This book is an update of the author’s 1999 edition which had been written to analyze the Asian financial crisis of the 1990s. In this 2009 edition, the author revises and updates the original work to explain the banking crisis, from a historical perspective. He constructs an easy-to-understand model of how the economy operates as framework for his analysis. The book’s main message is that we need to review and learn from the Asian crisis because it was a dress rehearsal for the global financial crisis we face now. The current financial crisis has reached the core of the global financial system and its persistence has been destructive for the global financial system and banks that operate internationally. The introductory chapter is not so much about what happened as to why it happened. The book can be broadly divided into two sections. The first comprising chapters 1-4 provides a history of financial crises. The second comprising chapters 5-10 discusses how the modern global financial system evolved over time touching on the gold standard, IMF, hedge funds, Federal Reserve, Alan Greenspan, economic bubbles, regulation and deregulation, and the shadow banking system. Economic policy makers, Krugman argues, should relearn the “Keynesian compact” to enable them to pursue policies that allow market forces to work and to achieve full employment...
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