Alternative Policy Responses to the Global Financial Crisis

Authors


Tom Valentine, Adjunct Professor of Finance, MGSM, Macquarie University, North Ryde, New South Wales 2109, Australia. Email: tom.valentine@mgsm.edu.au

Abstract

Governments have reacted to the economic slowdown arising from the Global Financial Crisis by injecting a fiscal stimulus into their economies. This policy will be ineffective when the country has a floating exchange rate, because the resulting inflow of funds will cause the exchange rate to appreciate, offsetting the stimulus effect. The experience of the Great Depression has suggested a better package of policies to deal with a global slowdown.

Ancillary