Theoretical Foundations and Policy Responses of Contemporary Economic Crises

  • Mark Baimbridge
  • Ioannis Litsios
  • Karen Jackson
  • Uih Ran Lee


This chapter explores how developments in macroeconomics following the breakdown of the post-war Keynesian era led to the introduction of fiscal and monetary policymaking based on neoclassical assumptions that ultimately have been largely detrimental. Hence, as a consequence of addressing the problems generated by the global financial crisis and subsequent Great Recession many European economies have now entered a new phase of economic difficultly, a process magnified for a number of eurozone countries engulfed by the sovereign debt crisis. Although the aggressive use of expansionary monetary policy by central banks to push short-term nominal interest rates to historically low levels was the textbook response expected from central banks, it has led to the situation of a liquidity trap as they reach the zero lower bound.


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Copyright information

© The Editor(s) (if applicable) and The Author(s) 2017, corrected publication March 2018. 2017

Authors and Affiliations

  • Mark Baimbridge
    • 1
  • Ioannis Litsios
    • 2
  • Karen Jackson
    • 3
  • Uih Ran Lee
    • 4
  1. 1.School of Management University of BradfordBradfordUK
  2. 2.Plymouth Business School University of PlymouthPlymouthUK
  3. 3.Westminster Business School University of WestminsterLondonUK
  4. 4.Department of Economics and Related StudiesUniversity of YorkYorkUK

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