June 6, 2009 4:23pm
Today’s guest blogger is Dr. André Lara Resende, a well-known Brazilian economist. His fascinating contribution was brought to my attention by Dr. Mônica de Bolle, another outstanding Brazilian economist whom I first met when I was an external examiner for her LSE PhD thesis. I am particularly intrigued by Lara Resende’s argument that this downturn is different from all past downturns, including the Great Depression of the 1930s, because of the continuing high level of private sector indebtedness, and that under these conditions neither monetary policy nor Keynesian fiscal policies are likely to be effective. But judge for yourself.