Seminar Series: Abstract

2.00
March 31 2009
Seminar Room B (Arndt Room)

On Fiscal Stimuli and Keynesian Lessons: Short-term Gains and Long-term Costs, If Any
Max Corden, Professorial Fellow, Department of Economics, University of Melbourne

As background, please see the December 2008 Melbourne Institute Working Paper 25/2008 "The World Credit Crisis: Understanding It and What To Do" -- can be downloaded at http://www.melbourneinstitute.com/publications/working/ ------ This paper expounds a story in four stages to explain the world credit crisis, namely: (1) too much credit - an international perspective, (2) too much risk - reaction to low real interest rate, (3) the fatal flaw - the new complex financial instruments, and (4) the panic- bank lending dries up. The paper also discusses the relationship of this crisis to the often-expected crisis of the global imbalances, and it outlines various policy implications.