After a first round table which had made it possible to approach the causes and mechanisms of the financial crisis, the Paris school of economy organized a second meeting around the economic crisis with recognized specialists in macro-economics: Agnès Benassy-Quéré, François Bourguignon, Daniel Cohen and Philippe Martin. The life of ideas was present at this event. Video extracts.
The speakers articulated their interventions in two stages, they first developed the analysis of the crisis and then examined the policies to be implemented at national and international level.
“” The crisis – act II : Entry into reality »»Table-Ronde organized at the Paris School of Economy on November 4, 2008.
Summary :
– First part: Analysis of the crisis
Global growth was based on American consumption, itself permitted by credit. It is this model of growth based on particularly American debt that collapses.
Agnès Benassy-Quéré, director of Cepii
Daniel Cohen, École Normale Supérieure, Paris 1 and Paris School of Economy
Philippe Martin, Paris I, Paris school in Paris and Cepr
François Bourguignon, director of the Paris School of Economy
– Second part: the policies to be implemented
What are the policies available to the authorities to limit the economic impact of the crisis ? The main problem is that of coordination, in particular Europe level.
Agnès Benassy-Quéré, director of Cepii
Daniel Cohen, École Normale Supérieure, Paris 1 and Paris School of Economy
Philippe Martin, Paris I, Paris school in Paris and Cepr
François Bourguignon, director of the Paris School of Economy
First part: Analysis of the crisis
Global growth was based on American consumption, itself permitted by credit. It is this model of growth based on particularly American debt that collapses.
Agnès Benassy-Quéré returns to the international monetary system and insists not only on the necessary construction of a new Bretton Woods which will be the stake of the international meetings to come but also on the urgency to leave the former Bretton Woods which, abandoned in theory in 1973, continued de facto to operate.
Daniel Cohen Light the three levers of the crisis: 1/ The real estate bubble generated by a lax monetary policy of credit. 2/ The rise in oil prices, not accommodated by monetary policies which have refused to make inflation, resulted in a drop in purchasing power 3/ The collapse of financial intermediaries.
Philippe Martin recalls that the financial phase of the crisis is not over and returns to the impact of Credit Crunch on the real economy.
Second part: the policies to be implemented
What are the policies available to the authorities to limit the economic impact of the crisis ? The main problem is that of coordination, in particular Europe level.
Agnès Benassy-Quéré Recalls that there are three types of policies, cyclical (monetary and budgetary), the regulatory policies of the financial system and those of refoundations of the International Monetary System.
Daniel Cohen Indicates that the importance of monetary policy should not be overlooked as a way to exit the crisis, but that only fiscal policy can respond to the $ 1500 billion lost in the financial crisis. On the other hand, France was wrongly deprived of automatic stabilizers. Daniel Cohen insists that pharaonic budgetary policies are certain to fail because they take time to be implemented and will therefore come when we no longer need it. It is therefore necessary to favor short -term actions, with high social demand, such as the construction of social housing.
Philippe Martin Returns on the need for coordination of budgetary revival policies but above all highlights the effectiveness of rapid and modest budgetary policies only.
François Bourguignon synthesizes and completes the debates. In particular, on the one hand, he insists on the challenges and the role of social protection systems and on the other hand on the problems of developing countries.