Theoretical and Historical Origins of the 2007-08 Financial Crisis

Kaitlin Craig

Date of Award

2011

Document Type

Thesis

Degree Name

Bachelors

Department

Social Sciences

First Advisor

Strobel, Fred

Keywords

Financial Crisis, Efficient Market Hypothesis, Hyman Minsky

Area of Concentration

Economics

Abstract

After the onset of the global financial crisis in 2007, a vast amount of literature has surfaced attempting to explain the probable causes. I instead followed the combination of theoretical, historical and political theories that provided the channels by which the United State�s economy experienced a detrimental overinvestment in the mortgage market followed by a collapse of the banking system and ultimately the entire financial system. A recurring theme surrounding the theoretical edifices upon which the economic profession stood is the inherent efficiency of markets. In this respect, it is clear that Hyman Minsky is vindicated in his financial instability hypothesis and opposition to the deregulation policies in the 1980s. The neoliberal growth model that also surfaced in the 1980s increased the United State�s capacity to increase leverages and debt, and the resulting decrease in the savings rate exacerbated the effects of the burst in the housing bubble ultimately resulting in the worst financial crisis since the Great Depression.

Rights

This bibliographic record is available under the Creative Commons CC0 public domain dedication. The New College of Florida, as creator of this bibliographic record, has waived all rights to it worldwide under copyright law, including all related and neighboring rights, to the extent allowed by law.

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