During times of economic crises, the public policy response is to abandon basic economic thinking and engage in “emergency economic” policies. We explore how the current financial crisis was in part caused by previous emergency economic measures. We then investigate the theoretical limitations of emergency economic responses. We argue that these responses fail to take into consideration the practical conditions of politics, thereby making them unsuitable to remedy the problems of a crisis. Lastly, we provide a preliminary analysis of the consequences resulting from emergency economic policies initiated in response to the 2008 financial crisis.
We thank the participants of the Writh Institute Workshop on Austrian Economics for helpful comments. We also acknowledge and thank the Templeton Foundation for support of the F. A. Hayek Program for Advanced Study in Philosophy, Politics and Economics at the Mercatus Center at George Mason University
Boettke, P. and Palagashvili, L. (2016), "The Comparative Political Economy of a Crisis", Studies in Austrian Macroeconomics (Advances in Austrian Economics, Vol. 20), Emerald Group Publishing Limited, pp. 235-263. https://doi.org/10.1108/S1529-213420160000020011Download as .RIS
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