In This Review

Against the Consensus: Reflections on the Great Recession
Against the Consensus: Reflections on the Great Recession
By Justin Yifu Lin
Cambridge University Press, 2013, 273 pp

Lin, a former World Bank chief economist, examines the causes of the 2008 financial crisis. His analysis is kinder to China than other reviews of the crisis have been, and he places a good deal of blame for the disaster on financial deregulation in Europe and the United States. Lin argues that to end today’s global economic stagnation and to reduce the risk of future financial crises, banks and households in Europe and in the United States must repair their balance sheets and Western governments must regain the flexibility they need to pursue sound fiscal policies. Economies around the world require long-term investments in infrastructure and education, and Lin urges international financial institutions to lend more for those purposes, financing such loans by borrowing in financial markets or directly from countries with excess foreign exchange reserves. Doing so would boost economic recovery and create jobs in rich countries while furthering development in poor ones. Lin also presents a rather sketchy proposal for reforming the international monetary system by introducing a new internationally agreed-on reserve asset and establishing relatively stable exchange rates.