Insights from research at HEC Lausanne-UNIL – An historic bull market at the tail of end, an ongoing trade war, a bond bubble and gloomy economic indicators are all signs of an imminent recession. In such a climate there is a widespread fear that may well contribute to triggering the economic crisis itself. The research conducted by Prof. Philippe Bacchetta and his co-author on the causes of the 2008 crisis is therefore very topical!
As President Franklin D. Roosevelt famously once observed: “The only thing we have to fear is fear itself”. In their research, the two authors show how, in 2008 and 2009, conditions were highly conducive to creating a self-fulfilling cycle of fear: a cycle in which a sense of panic and pessimism fuel a series of self-realization events that quickly lead to a global economic crisis.
Is the 2008 crisis scenario happening again today? Could the results of the research conducted on this topic by Professor Bacchetta and his co-author be applied to the current context?
As the world waits for the next major financial shock, both policymakers and practitioners would benefit from Philippe Bacchetta and his-coauthor’s explanations of the last crisis provoked by a panic that gripped the world’s companies and consumers.
To be read on HECimpact, the blog about the research conducted at HEC Lausanne.
Get to know more about: