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An Economist Explains What Happens If There’s Another Financial Crisis

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An Economist Explains What Happens If There’s Another Financial Crisis

World Economic Forum,

5 min read
5 take-aways
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The reforms in response to the 2008 financial meltdown may not be enough to avert another crisis.

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8

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Recommendation

Amid a return to growth many years after the 2008 financial crisis, the IMF and other institutions are now raising the alarm that reforms deployed in the crisis aftermath won’t be adequate to address another cycle of crash and burn. In this informative interview with the World Economic Forum’s Ross Chainey, noted economist Kenneth Rogoff expresses concern that nations lack the tools to confront a new crisis, and that inequality, technology and climate change will make enormous impacts on future generations. This sobering but ultimately hopeful article will engage executives, economists and policy analysts.

Summary

The 2008 financial crisis began with a problem in US banks, but it triggered a chain reaction that led to the worst worldwide recession since the 1930s. By 2009, output had shrunk to a fraction of what it was in 2008, and it was the first time global GDP dropped. The global economy grew $10 trillion less than it would have, had the crisis never happened, according to estimates. Government leaders and central bankers went into triage mode and avoided a catastrophic meltdown by rescuing large banks, using quantitative easing to inject money into the financial...

About the Authors

Kenneth Rogoff is a Nobel Prize recipient and professor of public policy and economics at Harvard University. Ross Chainey is a digital media specialist with the World Economic Forum.

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