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What have been the main developments in macroeconomics and financial economics since the 2008 financial crisis?

Economics Dec 15, 2020

What have been the main developments in macroeconomics and financial economics since the 2008 financial crisis?

Expert Solution

The world of economic theories or principles changed significantly after 2008 (the global financial crisis) with long-term consequences. The financial crisis gave economic inequality and insecurity.

This, in turn, led to the development of macroeconomics reflecting the aggregation of macroeconomic models because of changes in individuals' behavior. The formal macroeconomic model was used to generate new and improved ideas about the economic downturn. The 2008 financial crisis is the worst economic disaster all over the world after the great depression. This crisis made it clear that the economy needs a deep reassessment and reformation.

On the other side, this economic downturn also led to affect the level of national output, investment, etc.

Impact on macroeconomics:

As a discipline, macroeconomics is also influenced by the great recession. It gives the economy a negative demand shock represented by the IS-LM model. However, the evolution of macroeconomic theory is started in 1933.

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