Crisis in Academic Economics

Vincenzo D’Apice and Giovanni Ferri
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Vincenzo D’Apice: Italian Banking Association

Chapter 11 in Financial Instability, 2010, pp 170-183 from Palgrave Macmillan

Abstract: Abstract In spite of some encouraging signals of recovery, the global economy still faces uncertainty about the consequences of the recession triggered by the Great Crisis of 2007–09. This uncertainty largely stems from the unprecedented disruption of the financial system as a whole brought about by the crisis. Thus, it is useful to analyse from an academic point of view what caused the financial excesses and rising leverage in the precrisis USA and elsewhere. The genesis of this is related to various underlying factors. Poor incentives were provided in a context of intense financial innovation accompanied by regulatory loopholes. On its part, an exceedingly lenient monetary policy underestimated the perils of inflation in asset prices. Furthermore, the set-up for the governance of globalization proved inadequate.

Keywords: Monetary Policy; Financial Market; Risk Measure; Hedge Fund; Credit Default Swap (search for similar items in EconPapers)
Date: 2010
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Persistent link: https://EconPapers.repec.org/RePEc:pal:pmschp:978-0-230-29711-1_12

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DOI: 10.1057/9780230297111_12

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