Lessons from the Crisis: the Macroeconomics of Leverage

Paolo Leon

Chapter 11 in Sraffa and the Reconstruction of Economic Theory: Volume Two, 2013, pp 265-272 from Palgrave Macmillan

Abstract: Abstract Let me advance a possible explanation of the current stagnation and of the preceding crisis and crash. The 2007 crash, generally thought to be of financial origin, is imputed to speculation without regulation and/or to the inevitable eventual failure of otherwise self-fulfilling expectations: surely, there must be more to it, and an ample literature has accordingly developed. In this chapter I shall merely offer hypotheses, unaccompanied by statistical proof. Logic mistakes are likely, but my purpose is to stimulate research by others. In the following argument I will discuss events in the USA and the UK, and to a lesser extent continental Europe (perhaps Japan) - the argument is restricted to something that looks like a closed economy; and, in effect, if a China was not there, I don’t know what part of the following could stand.

Keywords: Central Bank; Bargaining Power; Full Employment; Wage Earner; Consumption Function (search for similar items in EconPapers)
Date: 2013
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Persistent link: https://EconPapers.repec.org/RePEc:pal:palchp:978-1-137-31916-6_12

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DOI: 10.1057/9781137319166_12

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