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Growing out of Crises and Recessions: From Regulating Large Financial Institutions To Redefining Government Responsibilities

Marcel Boyer ()

No 13-398, TSE Working Papers from Toulouse School of Economics (TSE)

Abstract: I characterize and discuss in this paper the challenges and pitfalls we must face to grow out for good of the recent and future financial crises and economic recessions. I propose a brief history of the last crisis and insist on the loss of confidence within the banking and financial sector, which propagated later to the real sector. I discuss ways to rebuild confidence and move out of a stable bad economic equilibrium, due in part to inefficiently designed bonus systems. Considering data on gross job creation and loss in the private sector, I challenge the sorcerer’s apprentices plan for reforming capitalism and I recall the role of creative destruction. I show that government deficits and economic growth are not good friends and I offer a reference to the Canadian experience of the two decades 1985-2005. Finally, I discuss fiscal and regulatory reforms and propose redesigned roles for governmental and competitive sectors in generating a more prosperous economy.

Keywords: Financial crisis; confidence; creative destruction; fiscal reform; prudential regulation; competitive social-democracy (search for similar items in EconPapers)
New Economics Papers: this item is included in nep-his
Date: 2013-04
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