The economic cycle of fear: will panic fuel the next global recession?
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.
Get to know more about:
- Prof. Philippe Bacchetta: Philippe Bacchetta is Full Professor of Macroeconomics, Swiss Finance Institute Senior Chair, and Director of the Department of Economics at HEC Lausanne, University of Lausanne. He is also Program Director of the International Macroeconomics and Finance program of the Centre for Economic Policy Research (CEPR, London). His research interests include international finance, financial crises, exchange rates and monetary economics.
- Department of Economics: Research in the Department of Economics focuses on the areas of health, industrial, public, spatial, experimental and national economics along with theoretical and applied econometrics, finance and European integration.
par HEC Communication