The comparative (party) politics of the Great Recession: Causes, consequences and future research agenda

Abstract

By the end of the first decade of the twenty-first century, the world economy was on the brink of collapsing. On 15 September 2008, Lehman Brothers went bankrupt, marking the starting point of the crisis. After all, this was one of the oldest investment banks on Wall Street and its bankruptcy sparked financial panic all over the planet. Given that financial markets are heavily interlinked in the twenty-first century, doubts about the solvency of the United States financial sector due to its exposure to the real-state bubble resulted in alarming news about the solvency of financial systems in all countries. Dramatic government responses became crucial in avoiding the risk of worldwide financial collapse. Right after the onset of the crisis, heads of government had no other option than to try to calm the markets at any cost. Central banks and finance ministers were forced to act rapidly, but after a while it became clear that not all countries reacted in the same way. Whereas the United States has adopted a quantitative easing strategy, almost all European countries have preferred austerity policies.