Implications of the Recent Financial Crisis for Innovation
WORKING PAPER
(1.97 MB)
Authors claim there is a justifiable concern about the long-term nature of the economic stagnation experienced today.
Stepping back from the immediate facts of the 2008 financial crisis, the authors consider the financial requirements of innovation and provide historical perspective on the financial boom and bust of the 2000s. The authors cite the financialization of the 1980s that changed the objectives of non-financial corporations as the reason why the stock market boom of the 2000s was not accompanied by the investment and innovation of previous booms. The full effects of that financialization were felt in that decade, with finance financing finance, rather than innovation or expansion.