The Financial Crisis 2007-08 and Causality: A Hicksian Perspective

Eduardo Fernandez-Pol ()
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Eduardo Fernandez-Pol: University of Wollongong, http://business.uow.edu.au/econ/who/UOW010514.html

Economics Working Papers from School of Economics, University of Wollongong, NSW, Australia

Abstract: Almost everyone agrees on two general features displayed by the recent banking crisis, namely: the crisis was stupefyingly complex and the financial system was devoured by its own creations. Beyond these points of agreement, there are many questions that will be debated by academics and policymakers for decades. One of the outstanding questions is what caused the financial crisis 2007-08. To shed light on this question, the paper compiles a list of the tentative causes of the recent financial crisis, discusses their separability and attempts an appraisal of the separable causes using the Hicksian methodology for causality analysis. Specifically, this paper identifies three major separable causes of the recent banking crisis and brings into sharp focus the far-from-trivial requirements that are necessary in order to demonstrate that a particular set of events can indeed be the preponderant causes of the severe banking crisis 2007-08.

Keywords: Financial crisis 2007-08; causality analysis; Hicksian methodology; separable causes (search for similar items in EconPapers)
JEL-codes: B41 G10 (search for similar items in EconPapers)
Pages: 23 pages
Date: 2010
New Economics Papers: this item is included in nep-ban, nep-fmk and nep-pke
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