The Great Depression, the Great Recession and the Next Crisis


Professor Chong-Yah Lim & Hui-Ying Sng

Published: September 2011


The paper discusses and pinpoints three strategic factors that led to the global Great Depression of the early 1930s. After the Great Depression, the lessons learned were encapsulated in Keynesianism and Monetarism. The unanticipated and unprecedented global Great Recession of 2008–09 did not degenerate into the global Great Depression. The paper maintains that this was because of the voluntary global adoption and implementation of Keynesianism, not Monetarism. By May 2010, world industrial production had recovered beyond its previous peak in March 2008. But has the world economy really recovered? Although the world succeeded in aborting the global Great Recession, high unemployment aggregates, bloated budgets and sky-high debts continue to dog many developed economies, including the United States, the Eurozone nations and the United Kingdom. The paper goes on to discuss if the growth path of the world economy would take the form of a W-shape. The paper concludes with the overall important lessons learned by the world in handling the global Great Recession and the Keynesian prescription.



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