Multiple Choices: Economic Policies in Crisis

Daniel Heymann and Axel Leijonhufvud

No 2013-1, Documentos de trabajo del Instituto Interdisciplinario de Economía Política IIEP (UBA-CONICET) from Universidad de Buenos Aires, Facultad de Ciencias Económicas, Instituto Interdisciplinario de Economía Política IIEP (UBA-CONICET)

Abstract: Macroeconomic crises frustrate expectations, threaten the fulfillment of contractual promises and force dramatic revisions of living standards and wealth perceptions. They belong to a family of memorable episodes that leave traces in economic behavior and performance for a long time. But all crises have their own idiosyncrasies. When it comes to policies, the particularities matter and are often essential. Of particular importance are the balance sheets and cash flows of the major sectors, including governments and the central bank. In this paper we review policy options after the fact, according to the types and the intensities of the disturbances. We explore possibilities and limitations of monetary instruments, fiscal policies and debt restructurings, depending on conditions such as levels of public and private indebtedness and the degree of segmentation of credit markets. It also addresses preventive policies, including macro management, regulation, and measures to modify incentives, especially in the financial sector.

Keywords: Macroeconomic crises; Wealth perceptions; Web of contracts; Liquidity; Fiscal policy; Debt restructuring; Policy reform (search for similar items in EconPapers)
JEL-codes: E00 E32 E44 E52 E62 (search for similar items in EconPapers)
Pages: 57 pages
Date: 2013-03
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Citations: View citations in EconPapers (1)

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Chapter: Multiple Choices: Economic Policies in Crisis (2014)
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