The great depression, the U.S. sub-prime crisis and the Japanese "lost decade" : a comparative study

Abstract

The period between the 1920's up to the present day, saw a number of financial and economic crises that had an adverse effect on regional as well as global economies. The proposed study plans to investigate the root causes of a number of cases of financial instability that occurred between the mentioned dates. It will also attempt to analyse the extent of the effect of each crisis on the respective economies, with regards to a number of different factors as stated in the methodology chapter. The study will also seek to compare the cause and effect between the crises, comparing the Policy stance taken to overcome them. The aim of the study is to analyse three different crises, namely The Great Depression of the 1930's, the Japanese Banking crisis of the 1990's and the recent Sub-prime Mortgage crisis of 2007. The study will also show the different monetary, fiscal and political actions taken by the countries, subject to the respective crises, to try to re-stabilise the economic situation in which these countries found themselves. Literature on the various causes of the crises, as well as the theoretical background behind what constitutes a crisis, will be assessed and discussed. In addition, the views of various theorists from differing schools of thought will be considered. That is, the study will attempt to show the different recommendations made to the authorities in order for the latter to attempt to rectify their country's situation by regaining economic growth and financial stability.