The Great Recession of 2008-2009: Causes, consequences and policy responses

Employment Working Paper No. 61

The global financial crisis of 2007 has cast its long shadow on the economic fortunes of many countries, resulting in what has often been called the ‘Great Recession’. What started as seemingly isolated turbulence in the sub-prime segment of the US housing market mutated into a full blown recession by the end of 2007. The old proverbial truth that the rest of the world sneezes when the US catches a cold appeared to be vindicated as systemically important economies in the European Union and Japan went collectively into recession by mid-2008. Overall, 2009 was the first year since World War II that the world was in recession, a calamitous turn around on the boom years of 2002-2007.