Description
This book examines the role of uncertainty on financial decisions – and, consequently, on financial markets – in the buildup to and aftermath of the Great Recession. It tracks the significant growth and important structural changes in the financial sector during the past few decades, both of which made the economy more vulnerable to perceptions of risk in the markets. Halperin argues that conventional economic models have lost relevance by failing to take these developments into account appropriately, and also explains that because of financial globalization we can no longer understand what happens in the economies of major countries by relying on “closed-economy” thinking. The book concludes with a list of policy recommendations designed to increase the resilience of the financial markets to negative economic developments and to reduce incentives for risk taking, including a proposal to eliminate the double taxation of dividends. Ricardo A. Halperin taught macroeconomics and monetary theory at the University of Buenos Aires, Argentina, and advised Argentina’s Minister of Economy, Secretary to the Treasury, and National Development Bank before joining the World Bank, where he held various management positions. He is currently retired. 1. A Failure of Imagination Part A 2. The Great Recession of 2007-2008 3. Fingers in the Dike Part B 4. Financial Intermediation and the Economy 5. The Evolution of Financial Intermediation Part C 6. Economics’ Quest for Relevance 7. Theories of Business Fluctuations 8. The Elusive Search for Economic Motives 9. Risk, Uncertainty, and Macroeconomic Theory Part D 10. The Visible Hand 11. Regulation in the Financial Sector 12. Prudential Regulation Part E 13. Challenges Ahead 14. Economic Policy Implications 15. Summing Up
