One of the consequences of the large-scale international financial crisis has been an alarming increase in debts and public deficits in the developed countries. The remedies proposed by international bodies and governments for dealing with this situation have been the traditional ones: cuts in public expenditure and/or tax increases. As the adjustment indicated is on average 8-9 points of Gdp, clearly this policy can be achieved only through a radical downsizing of welfare systems, unless we develop and adopt systems for managing the public debt created by the crisis that will free the national budgets of their burden, as happened after all the large-scale financial crises in the past. only subscribers can see the full article

The current Great Recession is the cost of the global imbalances of the Great Moderation period, when monetary policies and regulations were very lax. In the future we will pay the cost of policies that allowed us to avoid a new Great Depression seventy years after the previous one. This article reflects on the effects of the crisis and on the priorities and constraints of future choices in economic policy in relation both to the systems of social protection and the need for additional resources. After the first oil crisis the industrialized world awoke from its twenty-year dream of a golden age of growth, and this awakening meant revising downwards expectations as to improvements in individual standards of living, but the challenge for economic policy now is to prevent any further decline.only subscribers can see the full article