Abstract
This paper studies the relationship between long-term growth of GDP per capita, institutional regimes of accumulation (ROA), systemic risk and the Great International Crisis of 2008-2010. The principle hypothesis behind the work is that the ROA provides a foundation for long-term growth as a type of fundamental variable, and that this growth provides a buffer against systemic risk in the sense that sustainable growth provides resources for debt provision and employment stimulation. The emergence of a viable ROA is crucial for long waves of growth which stimulate both private sector profit and public sector tax receipts which (using conventional terminology) reduce the structural deficit for both sectors. Low rates of long-term growth, therefore, provide a good indicator of the emergence of ?long wave systemic risk? (LWSR), which left such nations vulnerable to uncertainty, financial crisis and recession. The paper investigates the inability of growth for various decades to ?cover? instabilities associated with the Great Crisis, leading to high rates of LWSR, especially for European and North American nations that bore the brunt of the crisis.
Highlights
The Core areas of Western Europe and North America were largely affected by the Great International Crisis and Recession (GIC) because they were in long wave downswing where finance dominated industry, profit was relatively low and where no viable regime of accumulation has been emerging over recent decades
We started with a detailed taxonomy of wave-position in the short and long-runs, and recognised that the World has been undergoing long wave downswing over the past 3 decades, as has the European Union and over the past 2 decades North America and Japan
We devised a “long wave systemic risk” apparatus based on the ability of the continents, regions and nations to utilise growth as a way of financing their debt levels and employment requirements
Summary
Summary: This paper studies the relationship between long-term growth of GDP per capita, institutional regimes of accumulation (ROA), systemic risk and the Great International Crisis of 2008-2010. The principle hypothesis behind the work is that the ROA provides a foundation for long-term growth as a type of fundamental variable, and that this growth provides a buffer against systemic risk in the sense that sustainable growth provides resources for debt provision and employment stimulation. Low rates of long-term growth, provide a good indicator of the emergence of “long wave systemic risk” (LWSR), which left such nations vulnerable to uncertainty, financial crisis and recession. The paper investigates the inability of growth for various decades to “cover” instabilities associated with the Great Crisis, leading to high rates of LWSR, especially for European and North American nations that bore the brunt of the crisis
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