Explaining the Great Recession

Tyler Cowen

Tyler Cowen is general director of the Mercatus Center at George Mason University, co-author of the popular economics blog Marginal Revolution, author of the New York Times' "Economic Scene" column, contributor to The New Republic, The Wall Street Journal, Forbes, Newsweek, and The Wilson Quarterly, and the Holbert C. Harris Chair professor of economics at George Mason University.

According to Professor Tyler Cowen, the Great Recession was caused by a number of different factors. Cowen outlines 4 distinct and complicated problems which led to the downturn:

• A drop in the aggregate demand
• A “horribly” performing banking sector
• Problems with monetary policy
• An increase in the “risk premium”

Prof. Cowen explains why one economic model isn’t sufficient to explain the economic downturn. He shows how several different economic models can be used to explain both the cause and the effects of the recession.

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