Months of high inflation, both in the United States and globally, have fueled intense debates about both root causes and potential solutions. Here, Jason Furman of Harvard University and James K. Galbraith of the University of Texas, Austin, offer opposing perspectives on what has become the year’s biggest economic-policy challenge.
STOCKHOLM – Although Sweden is a small country, its experiences managing its financial crisis of the early 1990’s may provide valuable lessons for others.
The Swedish crisis began in 1991 with the first major insolvency in the financial market. A number of damaging developments followed:
Although the crisis that began in the United States in 2007 has since spread worldwide, the outlook for the US economy is clearly crucial to eventual global recovery. If we assume that the US is experiencing a typical financial crisis, GDP will fall this year as well. Unemployment can be expected to peak around 12%, and gross public debt will have increased by 50%, which corresponds to around 90% of GDP.
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