RESPONSES TO THE RECENT FINANCIAL AND ECONOMIC CRISIS: FROM HETERODOXY TO RETURN TO ORTHODOXY

: This article briefly shows the responses of some developed and emerging countries to the financial crisis of 2007-2008, whose reflections are still felt nowadays. We stressed the first quite radical and fast responses to what could be, perhaps, a crisis worse than that of the 1930’s, after the initial extremely poor policy choice from the then US Secretary of the Treasury, “Hank” Paulson, and the Chairman of the Federal Reserve, Ben Bernanke. Most developed countries as well as developing ones made broad recourse both to quite heterodox monetary and fiscal policies, until more or less the mid-2010, when there was a sudden U-Turn in those policies. We detailed some of these policies in the UK, USA, Continental Europe and Brazil, emphasizing their very bad results, totally in disagreement with the theory behind them and, thus, with the predictions (Blyth, 2013). Notwithstanding, most of those countries keep this kind of policies until now, with some important exceptions, such as Iceland, Portugal and Spain, which, not coincidentally, started to grow economically and to decrease their unemployment rates.