Financial Crisis Reconsidered - The Mercantilist Origin of Secular Stagnation and Boom-Bust Cycles

Informationen zum Autor Daniel Aronoff is President of Landon Companies, USA. He has served as Vice Chairman of the Board of Trustees of Grand Valley State University, USA. Throughout several decades of participation in the professional world, Aronoff has been a frequent contributor to many media outlets including the Financial Times. Klappentext In The Financial Crisis Reconsidered , Aronoff challenges the conventional view that reckless credit produced the US housing boom and the financial crisis, explaining how the large current account deficit, and its mercantilist origin, was a more fundamental cause. He also demonstrates that the decision to provide relief for bank creditors rather than underwater homeowners was responsible for the prolonged recession that followed the crisis. Aronoff proposes a novel theory to account for the ultimate origins of secular stagnation and economic volatility. He shows how accumulation, which occurs when a person or country earns more than it ever plans to spend, generates both an excess of saving and a deficiency in demand. While savings provide the funds to promote booms, under-consumption ensures that these booms will turn bust and that the economy will fall short of its potential growth rate. Aronoff argues that mercantilists and top income earners engage in accumulation,and that the influence of both types has grown in recent decades. Combining economic theory and historical narrative, this book offers a new perspective of the housing boom and the financial crisis, concluding with innovative policy proposals to reduce accumulation without compromising the benefits of a market economy. Zusammenfassung In The Financial Crisis Reconsidered, Aronoff challenges the conventional view that reckless credit produced the US housing boom and the financial crisis, explaining how the large current account deficit, and its mercantilist origin, was a more fundamental cause. He also demonstrates that the decision to provide relief for bank creditors rather than underwater homeowners was responsible for the prolonged recession that followed the crisis. Aronoff proposes a novel theory to account for the ultimate origins of secular stagnation and economic volatility. He shows how accumulation, which occurs when a person or country earns more than it ever plans to spend, generates both an excess of saving and a deficiency in demand. While savings provide the funds to promote booms, under-consumption ensures that these booms will turn bust and that the economy will fall short of its potential growth rate. Aronoff argues that mercantilists and top income earners engage in accumulation, and that the influence of both types has grown in recent decades. Combining economic theory and historical narrative, this book offers a new perspective of the housing boom and the financial crisis, concluding with innovative policy proposals to reduce accumulation without compromising the benefits of a market economy. Inhaltsverzeichnis PART I: THE CURRENT ACCOUNT DEFICIT, THE HOUSING BOOM, AND THE FINANCIAL CRISIS 1. The Metamorphosis of China's Trade Policy 2. Current Account Deficits, and the US Housing Boom 3. Mercantilism and the US Current Account Deficit 4. The Current Account Deficit: A Necessary Condition for the US Housing Boom PART II: THE CAPITAL FLOW BONANZA, THE CREDIT EXPLOSION, AND THE HOUSING BOOM 5. A Review of Explanations for the US Housing Boom 6. Decision Making During the Housing Boom 7. The Capital Flow Bonanza and the US Housing Boom 8. The Role of Policy During the Housing Boom PART III: ACCUMULATION AND SECULAR STAGNATION 9. Accumulation and Secular Stagnation – Part I, Theory 10. Accumulation and Secular Stagnation – Part II, Application PART IV: THE FINANCIAL CRISIS, I 11. Descent into the Abyss 12. The Policy Response<...

Table des matières

PART I: THE CURRENT ACCOUNT DEFICIT, THE HOUSING BOOM, AND THE FINANCIAL CRISIS
1. The Metamorphosis of China's Trade Policy
2. Current Account Deficits, and the US Housing Boom
3. Mercantilism and the US Current Account Deficit
4. The Current Account Deficit: A Necessary Condition for the US Housing Boom
PART II: THE CAPITAL FLOW BONANZA, THE CREDIT EXPLOSION, AND THE HOUSING BOOM
5. A Review of Explanations for the US Housing Boom
6. Decision Making During the Housing Boom
7. The Capital Flow Bonanza and the US Housing Boom
8. The Role of Policy During the Housing Boom
PART III: ACCUMULATION AND SECULAR STAGNATION
9. Accumulation and Secular Stagnation - Part I, Theory
10. Accumulation and Secular Stagnation - Part II, Application
PART IV: THE FINANCIAL CRISIS, I
11. Descent into the Abyss
12. The Policy Response
PART V: THE FINANCIAL CRISIS, II
13. The Dilemma of Policy in a Balance Sheet Recession
PART VI: POLICY OPTIONS
14. Policy Options

Commentaire

José Luis Oreiro

Associate Professor of Economics, University of Brasilia, Brazil

REVIEWER GUIDELINES

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With these points in mind, we would be grateful for your feedback on the project. Please feel free to structure your comments as you see fit (either as a single body of text, or as answers to some or all of the following questions), but please ensure the topics below are covered.

General

1) In your own words, please provide a short outline of the project.

The objective of the project is to provide a new explanation about the causes of the 2008 financial crisis in USA. According to the author the main cause of the magnitude of the bubble in the US housing market and the financial crisis that erupted after the bubble burst was the huge current account deficit of American economy that was financed, mainly, by huge capital inflows. These inflows of foreign capital produced a decrease in the long-term interest rate of safe assets in USA, inducing commercial and investment banks, insurance companies and other financial institutions to seek for bigger returns in the subprime mortgage markets.

Project

2) Does this proposal offer a useful and/or original contribution to the field? Is it addressing any new/emerging areas? Yes, the proposal is an original and useful contribution for the literature about the causes of 2008 financial crisis.
3) Does it adequately engage with recent scholarship? Does it take existing scholarship forward? Yes the proposal make a good review of the literature about the causes of 2008 financial crisis, and make an important improvement in our understanding about the economic mechanisms that fuelled the bubble in the housing market and the credit expansion behind it.
4) What are the strengths and weaknesses of the proposal? You may wish to consider structure, organization, coherence and presentation of material; scope, coverage and breadth of appeal or degree of specialization; whether there are any obvious omissions; timeliness and likely shelf-life of the research; what proportion of the work, if any, will require substantial re-working; and whether any suggested improvements fundamental to the project's success or discretionary matters which might be addressed after the project has been accepted.

As regards the strengths of the project I point the original explanation for the causes of the crisis, more specifically the link between the US current account deficit, credit expansion and housing market bubble. Other strength is that the explanation offered by the author is not based on any kind of irrational behaviour by economic agents.

Regarding the structure of the book I think that chapters are somewhat unbalanced in length. In fat, chapter 2 has 41 pages, chapter 3 has 18 pages and chapter 4 has 57 pages. The author may rewrite the chapters in order to have a more balances structure for the book. Another important point regards the comments about Hayek and Keynes on uncertainty and epistemology. I think that all these comments - that are presented in different sections in chapters 3 and 4 - must me transformed in a single theoretical chapter that should be read in the beginning of the book.

5) Do you feel the author/editor is suitably qualified to produce a high quality book on this topic? Yes, I think so.

6) If you are aware that the book is being considered for inclusion in a specific series, please comment on its suitabilit

Détails du produit

• Auteurs: Daniel Aronoff
• Edition: Palgrave UK
• Langues: Anglais
• Format d'édition: Livre de poche
• Sortie: 05.06.2016
• EAN: 9781349575473
• ISBN: 978-1-349-57547-3
• Pages: 308
• Thème: Springer Palgrave Macmillan
• Catégories: Sciences sociales, droit, économie > Economie > Branches spécifiques de l'économie; B, History, Öffentliche Finanzen, Besteuerung, Finance, Öffentlicher Dienst und öffentlicher Sektor, macroeconomics, Economic history, Public Economics, Economics and Finance, Macroeconomics and Monetary Economics, Macroeconomics/Monetary Economics//Financial Economics, capital markets, Public finance, Financial History, Finance, Public, Public finance and taxation, Civil service and public sector