Causes and Policy Responses of the Great Depression and the Financial Crisis of 2008: A Comparison
Journal: International Journal of Science and Research (IJSR) (Vol.8, No. 7)Publication Date: 2019-07-05
Authors : Musharrat Azam;
Page : 1728-1730
Keywords : Financial crisis 2008; Great Depression;
Abstract
This paper does a comparative analysis of the causes and policy responses between the Great Depression of 1929 and the Financial Crisis of 2008. The Great Depression in 1929 originated from a stock market bubble burst and a subsequent rise in interest rates due to the Federal Reserve�s contractionary monetary policy. The Financial Crisis of 2008 was on the other hand, caused through a real estate bubble burst that escalated with the creation of subprime mortgage backed securities. The Great Depression spread throughout the countries that had been maintaining a strict adherence to gold standard. The Financial Crisis transmitted outside the United States through the process of securitization. A series of monetary and fiscal policies and banking reforms eventually helped overcome the slowdown in economic growth caused by these two financial crises.
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