No Ordinary Recession

Axel Leijonhufvud

Ensayos Económicos, 2009, vol. 1, issue 53-54, 59-65

Abstract: This recession is different. The balance sheets of consumers, companies and banks are under pressure. The private sector seeks to reduce its debt and this counteracts the Keynesian stimulus more than what the usual flow calculations would suggest. There is no doubt that the deleveraging of banks is the most dangerous factor. The fiscal stimulus will have no significant impact unless the deleveraging of the financial system comes to a halt.

Keywords: balance sheets; deleveraging; fiscal policy; international crisis; recession (search for similar items in EconPapers)
JEL-codes: E32 E62 G01 (search for similar items in EconPapers)
Date: 2009
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