Financial Crises and Recession in the Global Economy

Financial Crises and Recession in the Global Economy

Financial Crises and Recession in the Global Economy

Financial Crises and Recession in the Global Economy

Synopsis

Acclaim for the first edition: 'Of 600 books I reviewed on new perspectives on the global economy as a system, this is the one that conveyed the most new information and plausible explanations for a variety of recent phenomena for which other explanations are unsatisfactory. This is the only book presenting a data-supported theory of the global economic system which connects the real world economy to the new global financial system.' - Kenneth E.F. Watt, Encyclopedia of Human Ecology '...the emphasis placed by the author on the international frame as the basic unit of economic analysis and his rejection of equilibrium as the principle informing that analysis make this book much more appropriate for understanding present-day reality than traditional macroeconomic treatises. Such a stance requires intellectual courage. Moreover, in its own terms, this work achieves the purposes it has set itself.' - G. Carchedi, Review of International Political Economy This timely and authoritative book explains the rise and fall of economies in Asia, Central America and Europe since 1980 and discusses these crises in the context of continuing economic globalization. This updated and fully revised edition includes a detailed account of the Mexican crisis of 1994-95, the Japanese crisis which has worsened in the late 1990s and the Asian crisis which emerged in 1997. Professor Allen discusses the impact of new uses and forms of money, and new financial flows such as electronic monies and offshore financial markets. These processes explain how the US economy has benefited from 'money-mercantilism' at the expense of other regions of the world. The author then provides a thorough taxonomy of the common patterns of recent currency crises. He formalizes a 'new political economy of money' which goes further than the conventional literature in explaining these patterns. Roy Allen provides policy recommendations for the G7, World Bank, IMF and various nations which will also prove invaluable to students and scholars of financial economics, international economics and international political economy.

Excerpt

The author originally decided to write this book because of his dissatisfaction with the typical textbooks in international economics, macroeconomics, and the related subjects that he teaches. These textbooks do not present the major structural changes and recent events in the global economy to his satisfaction; insufficient attention is typically given to financial market globalization, new trade patterns, new forms and uses of money, monetary-wealth processes, recent changes in the velocity of circulation of money, and recent financial crises and recession. Chapters 1-4 cover these topics.

Chapters 1-3 are organized in a manner which provides background material for Chapter 4's discussions of economic crises. The detailed case studies include the global recession of the early 1980s, the world stock market crash of 1987, the 1980s and continuing world debt crisis, the slumps of the early 1990s, Mexico's crisis of 1994-95, Japan's crisis after 1989, and Asia's crisis after 1997. Less detailed mention is made of the Great Depression of the 1930s, the US savings and loan crisis of the 1980s, the Russian crisis of 1998, and various other slumps.

The concluding Chapter 5, International Adjustments and Political Responses, summarizes what the book might contribute to the fields of international economics, macroeconomics, and related subjects such as international political economy. In addition, Chapter 5 provides suggestions for policymakers -- especially how they might minimize the risk of economic crises. The role of the G7, the World Bank, and the IMF are developed, and policy proposals are provided. Chapter 5 also directs attention to the ways that nations might find domestic advantage within the evolving structure of the global economy with domestically driven monetary, fiscal, and trade policies. The conclusions of previous chapters are contrasted with current thinking on the processes of international economic adjustment.

This book is rooted more in the international economics, macroeconomics, and international political economy literature than in other disciplines, but the author hopes that it can be useful to a wide range of social scientists, practitioners, and policymakers. The case studies are not tailored to a particular discipline; instead the author has tried to make them accessible to a wide audience. If the reader has some practical experience in the international economy or some academic training in economics and related . . .

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