The road to global economic recovery, 2009

In: Revista de economía del Caribe, Heft 4, S. 1-18

Abstract

These document contains three parts: the first part focuses on the lessons that have been learnt from the 2007-2009 crisis and how economic authorities handled the shock suffered in most variables. The conclusion is that Government intervention through fiscal policy is the only way to offset the weakness of households and firms. Monetary policy on the other hand can help, but it has limits in its ability to become a real source of economic growth. The second part makes a short review on current economic affairs including a discussion on whether the crisis has ended. Krugman accepts that the crisis is over, but he believes that we are still far from an economic expansion. Finally, the article analyzes the economic situation of Latin America and Colombia in particular. It points out that this crisis did not start in our countries and it did not happen because of bad economic policies as it used to happen in previous crisis in emerging economies. The crisis had an impact on these countries because of its effects on trade, commodities and capital flows due to the lower economic activity in developed countries. However we have evidence of strength in developing countries.