About the Seminar
The Great Recession affected the Netherlands severely in terms of output, unemployment and business performance. Strong domestic linkages between the financial sector and the real economy via banks, housing markets and pension funds exacerbated the economic downturn. Structural developments in capital markets have put real interest rates on a downward trajectory for decades. Extremely low real interest rates contributed to a rise in household and firm debt prior to the crisis and thereby fueled financial fragility. The collapse of the financial sector and subsequent deleveraging of banks, pension funds, households and the government sector landed the economy in the liquidity trap, where it got stuck until today. Secular stagnation with low economic growth, low inflation and interest rates being stuck at the effective lower bound is the largest macro-economic risk. Extremely low interest rates further trigger searches for yield in both housing and asset markets and contribute to larger financial fragility. The Dutch economic policy responses to deal with the Great Recession where inadequate. Fiscal austerity during 2011-2017, which generated a double-dip recession, was extremely costly. The financial architecture of the Netherlands has not been fundamentally reformed: household debts hardly came down, banks are still too big to fail and have inadequate levels of capital and Dutch pension funds never recovered. Bad economic policy responses and lack of fundamental reforms of the financial architecture can be explained in part by the political dominance of creditors over debtors and by putting the interests of the financial sector ahead of the rest of the economy.
About NIAS Seminars
NIAS Seminars are aimed to stimulate scientific cross-pollination within the NIAS academic community, but seminars are open to others who are interested. Please let us know if you wish to attend.