The Political Economy of Crisis Responses

Chapter 3, by Agnar Freyr Helgason, offers a review of political economy theories of crises responses. He starts by explaining the broad perspectives of the Keynesian and Austrian schools and then probes more deeply into recent work on government policy responses to economic crises, with a focus on the economic welfare of populations or households. The role of the welfare state and its importance during periods of crisis is considered, as well as the role of government policy more broadly, either that directed at the economy generally or at specific population groups. Key policy debates are covered, for example austerity versus stimulus, as well as mixed approaches.