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Jacobs, Bas

Jacobs, Bas

Willem F. Duisenberg Fellow

The Great Recession and its aftermath

The Great Recession is the defining event for the present generation of economists. Nearly 10 years after the fall of Lehman Brothers, economists still have many questions: What are the macro-economic, financial and political factors that caused the Great Recession, the slow subsequent economic recovery, the large permanent economic losses and the still fragile financial system? Why was the economic policy response – both in the Netherlands and abroad – so bad? And have the underlying macro-economic and financial problems been solved in the meantime?

Project Description

Why is it important to write a book on the Great Recession in the Netherlands? So far no historical accounts exists for the Netherlands. Most books on the Great Recession have been focused on the US, the UK or the Eurozone as a whole. However, the Great Recession played out differently in different countries depending on the specific macro-economic conditions in each country, but also because of the very different policy responses. The Netherlands is a special country because of its strong domestic linkages between the financial sector and the real economy via banks, housing markets and pension funds. Despite its large positive net wealth position, Dutch wealth is not very liquid because it is stored in large pension funds. Therefore, the Dutch economy behaved more like Spain than Germany during the crisis. Moreover, the Dutch economic policy responses were very different compared to the US and the UK. While the Anglo-Saxon countries were very quick to restore their financial sectors, while supporting household deleveraging with fiscal stimulus, the Dutch government did the opposite. Finally, the Netherlands is different compared to the US and the UK because of its membership of the Eurozone. This created completely different political and economic dynamics, but also imposed constraints on macroeconomic policies, e.g. in fiscal policy. Finally, this book is needed to document the economic record of the Great Recession for future generations. In 2017, the Dutch economy is booming, with a projected growth rate of 3.3 percent in 2017. Unemployment is rapidly declining and now stands at structural levels of around 5 percent. The Dutch growth performance is hailed by many politicians, pundits and some fellow economists as the definite proof that fiscal orthodoxy and structural reforms worked and that the critics were wrong all the time. This book aims to document carefully what really happened in the Netherlands and to document the false narratives of current policy makers and politicians in the hope that future generations do not repeat the mistakes of the Great Recession.

Selected Publications

Jacobs, Bas (2017), “The Marginal Cost of Public Funds is One at the Optimal Tax System”, International Tax and Public Finance

Jacobs, Bas (2018), “Blind Gokken met de Dividendbelasting”, Tijdschrift voor Politieke Economie, 12 (1), 1-21.

Jacobs, Bas (2015), De Prijs van Gelijkheid, third, revised edition, Amsterdam: Bert Bakker-Prometheus.

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