The Keynesian Business Cycle Theory

Published Date: 02 Nov 2017

Ahmed Taneem Muzaffar, Parvez Karim Abbasi and Md. Abid Hossain Khan (2009)-The authors explain that the recent financial crisis and recession that is grappling the world economy is expected to have a considerable impact on the economy of the world. The paper attempts to review the key issues responsible for triggering the global financial crisis that led to one of the worst recessions since the Great Depression of the 1930s. At what level and speed will government of India and other countries would generate and implement the policies that create a buffer against the worst effects of this global event.

Anamaria Avadanei (2011) - The author explains that a study has been conducted to view the recent contributions in the crisis-lending relationship, the main features of the banking system, the evaluation of credit risk in terms of numbers, facts, actions and a short analysis of the correlation between credit indicators consumer credit, credit risk ratio, medium exchange rate and the number of employees in the economy.

Anamika Sharma and Jitendra Rathore (2008) - The authors remark that in India, the last decade showed prominent signs and a lot of promise for fast-paced growth in the airline sector. The industry, before the gloomy signs of global recession began to appear, was soaring high. However, eventually, the economic downturn affected the aviation sector in India and dampened the spirits of the players – big and small. India is still a new arena for private players in the airlines business and stakes are high for one and all. In the present times, there is an immediate need to formulate effective strategies to survive through the recessionary phase. It is difficult for those in business to maintain their bottom lines and therefore they should resort to restructuring and consolidation

Anca Åžtefania Sava (2010) - The author aims to discuss the role of unemployment insurance during recession. He emphasises that unemployment insurance works as a built-in stabilizer for the economy and it highlights certain characteristics of these programs in developed and developing countries, in recession periods.

Andrea Elteto (2011)-The author elucidated that the extremely high unemployment rate and the indebtedness made the policy-makers to adopt austerity measures and realise the necessity of profound reforms. The biggest transformation processes began among the savings banks and on the labour market. The Endowments like the excellent infrastructure and successful companies, stronger export activity, international presence and innovation can provide the bases for such a durable growth. The author examines that the characteristics and economic role of immigration, the official policy towards the phenomenon and the effects of the financial and economic crisis of the years 2007-2010. Foreigners found vacant jobs first in the construction industry and agriculture. To the end of 2007 however, the construction boom ended and most of the foreign countries sank into a deep recession.

Andreas Kern and Christian Fahrholz (2009)-The authors instigates that during the autumn, the unrivalled stars of Wall Street and international financial markets have been struggling to understand why the boom was gone, that enjoyed years of bright sunshine in financial markets. During the last few weeks, the ongoing financial turmoil has created a climate of fear, among the financial intermediaries feeling that it is not warm anymore as the boom is away. Indeed international investors seek shelter as the boom is gone and the current global financial gale leaves darkness on global financial markets. In addition to this, the policy makers around the globe are trying to deliver relief by virtually flooding the war chest of panicking financial intermediaries and by promising to keep them going in any case. At this stage, most analysts and policy makers, including the ones with distinguished gut feelings, cannot get to grips with their spirits and are waiting for a ray of financial sunlight.

Anne Mostad-Jensen (2007) - The author elucidated that in times of economic crisis, the libraries find themselves in a Catch-22 situation. As defined by the Oxford English Dictionary a Catch-22, is "a supposed law or regulation containing provisions which are mutually frustrating". As the economic crisis continues and deepens, there is increased usage of the library, while at the same time library funding also decreases. Here author tries to compare between those libraries that have responded to economic recessions in the past, specifically during the Great Depression, and to that of those libraries, which are responding to the present economic recession. Historically, the most obvious place to look for examples of libraries’ reactions to economic recessions is the Great Depression. During the Great Depression, there was a huge anti-taxation movement that libraries, and more specifically the American Library Association (ALA), attempted to thwart.

Arindam Mandal , Prasun Bhattacharjee (2012)- The authors elucidate that the Great Recession which started in December of 2007 in United States had a substantial negative impact on the world economy. During the period of 2008-2009, the Gross World Product was declined by 1.1 percent with 3.4 percent drop in GDP of developed countries. Indian economy managed to grow at a modest rate of 5.35 percent in 2009, which was substantially lower than the average growth rate of 8.72 percent compared to the five years prior to the financial crisis period. The Recession has tumbled the BSE (SENSEX) from 20,000 points in Dec 2007 to 8,000 in March 2009.

Bernard Mnzava (2011) - The author describes the impact of the recent global recession in English Premiership football clubs. It explains the main sources of revenues and how the changing environment affected these sources. Here the paper also reviews on the major expenditures incurred by clubs and the main reasons for incurring the expenditure. Finally, the paper provides direction on the appropriate use of funds to reduce the impact of a global recession in future. Most of the financial experts thought that the crisis has affected only to world leading industry, banking and not to football industry. However, the economic fundamentals are underpinning the football industry to remain relatively resistant to the economic downturn. Revenues generated through club fan bases, long term broadcast and sponsorship contracts, which are secured in advance, may enable some clubs to run their business smoothly. Concerns have been raised about the impact of this crisis in English Premiership clubs.

Here the author concentrates on the recent global financial crises its main impact on clubs’ financial situation. Hence, the revenue is divided into three categories namely match day, broadcast and commercial sources. Match day revenue largely includes revenue from gate receipts (including seasonal tickets and membership). Broadcast revenue includes revenue from television and radio, from both domestic and international competitions. Commercial revenue includes sponsorship and merchandising. The main expenditure of any professional football club is the costs associated with playing talent. Player’s salaries take greater part of the total expenses incurred by a club. Excessive wage spending and inflated transfers registrations can explain financial losses in most clubs. For premiership clubs, extravagant player wages and overstated transfer fees are motivated by retention to the Premier League status and qualification to European competitions. In fact, revenue that can be generated from European competition is an incentive to increase investment in reality, most of the premiership clubs spend too much in playing talent hoping to achieve success in trophies that brings sturdy financial situation in their accounts. Speculation is anecdotal to identify when a player is at his peak, but it is objective to identify when a player is at his best. In fact, buying a player at his best is similar as buying a stock when there is a run of good news. Players bought at their best performance are too expensive and demand high wages that brings more costs to the club. Another problem that seems to bring burdens to clubs is leveraged takeover strategy. In leveraged buyouts, the assets of acquired company are used as collateral for the borrowed funds and if needed even the assets of the acquiring company too. Manchester United and Liverpool are relevant examples of leveraged buyouts where most of their revenues are paid out as interest expense to service the loans taken during acquisitions.

Charles Leadbeater and James Meadway(2008)-The authors focus on the short term measures that can be taken to combat the recession which will provide a long-term strength in terms of economy and society. The more we can use the short-term crisis to address and accelerate our adjustment; the better will be our long-term challenges. The authors are focusing on the measures that needs to be innovative, greener, more sustainable and should provide a diversified economy. The development of the sectors needs to have a mix of intelligent public investment and partnership with business and entrepreneurship. The recession will create a new platform of growth if business entrepreneurs emerge to take opportunities in new growth industries and social entrepreneurs address the emerging social challenges. The key to success of measures is the ability to share and mobilise resources through networks.

Cheng Ge, Zhen Liu (2010) - Cheng Ge and Zhen Liu (2010) - The authors here review on Keynesian business cycle theory that identifies the cause of economic crisis, which blinds the investment and creates lack of demand. The article also indicates that fundamentally, the 1929 Great Depression and current global economic recession are the inevitable outcomes of capitalist mode of production. After that, it demonstrates that the strategy of trying to develop public economy as well as increasing its influences and controls over investment and consumption is the only way to limit vicious expansion of capitalist mode of production and prevent future economic crises. The 1825 crisis in UK is the first economic crisis of the world. Since then, capitalist economy has been fluctuated between boom and depression. Various business cycle theories evolved for explaining the phenomenon. As China is strengthening its connection with the outside world, its economy becomes part of the world economy. The fluctuation of world economy will inevitably exert great influence on export-driven Chinese economy on one hand. On the other hand, in consideration of quick expansion of Chinese economy and its participation in the world economy, each economic policy adopted by China will also play an indicative role in the world economy. Under the current conditions of global economic crisis, one of the most pressing tasks of economics is to combine research on business cycle and the development of Chinese economic conditions.

The Keynesian business cycle theory had significant influence on macroeconomics regulatory policies of various western countries. According to Keynes, there are two fundamental causes of crisis. One is collapse of marginal efficiency of capital, which is embodied by sudden lost of unrealistically optimistic expectation. The expectation increases expected return (price) of capital in the capital goods market to a dangerous level and blows the bubble. The bubble will eventually burst and lead to collapse of marginal efficiency of capital. The process of collapse is considerably short in terms of the long period of incubation and accumulation of crisis. The other cause is deficiency of effective demand. Marginal propensity to consume is less than one and gradually decreases the propensity to consume. It is true that by expanding the gap between richer folks and poor folks will decrease the propensity to consume of whole society and make the problem of over-investment even worse.

Keynes believed that the business fluctuates as market expectations and investor psychology fluctuates, and then there is a chance of inevitable outcomes of free market economy. In order to avoid the influence of business cycle, the duty of ordering the current volume of investment cannot safely be left in private hands.

Christopher Madden (2009) - The author explains that according to the latest economic forecasts, many of the world’s economies will enter into severe recessions in 50 or 60 years of time. The world’s ‘advanced’ economies are grown by around three to four percent in 2009, while the growth of emerging economies was slowed significantly. Recovery from the economic downturn was forecasted to begin in 2010, but it is expected to be slow.

The impacts will not be uniform; the downturn will influence differentially across countries, economic sectors, organizations and individuals. The severity of impacts will depend on a range of factors. Government policies, sources of revenue, levels of debt and, for individuals, level of education will all play a part in who is affected and the degree of impact. The timing of impacts is also unpredictable. The recession has been triggered by a ‘crisis’ in global financial markets. The consequent drop in asset values (such as stocks) is likely to feed first through to sectors that rely on asset income, such as endowments and the groups that they fund. Wider impacts might occur later as reassessments of wealth lead to fundamental changes in organisational and consumer behaviour. Thus, the effects ripple unpredictably outward from finance markets into the ‘real economy’, where their impacts may be felt for many years, such as in the form of long-term unemployment and it’s accompanying social costs. A recent report by the USA’s National Endowment for the Arts, found that artist unemployment peaked two years after the last US recession had ended. As the responses to this and other surveys indicate, people in the arts sector believe it is still too early to predict with any accuracy the effects of the downturn on the arts. This uncertainty is not helped by a lack of robust, objective evidence on the economic interdependencies of the arts economy and the effects of previous recessions on the arts.

Arts councils and ministries of culture have a key role in working to minimise the negative impacts of the downturn on the arts and in helping artists and arts organisations navigate such uncertain times. They also have a key role in advising on and coordinating the arts and cultural aspects of the much-publicised central government responses to the downturn. With so much uncertainty over the degree and timing of impacts, the effectiveness of policy responses, and possible changes in organisational and consumer behaviour, the task of arts agencies is a daunting one.

Cod U Ciprian (2011) - The author emphasis that the main factors for the evolution of investments before the financial crisis and determine how the financial crisis influenced the structure and volume of investments in the national economy.

Corina-Maria (2011), the author remarks that the current global economic crisis was ignited in the financial markets of the major developed economies but soon the real economy was also affected. Consumer spending was cut back, investment plans were cancelled and stock levels were run down. The economic situation is serious. GDP has shrunk, the unemployment level is rising, investments are still slowing, lending is tight and budget deficits are growing fast. Fiscal policies implemented by our country are subordinated to our lack of necessary funding and access to. However, that generated a monopoly on this sector of the IMF. In addition, a social crisis became imminent.

David Starr-Glass (2011) - The author remarks that the financial crisis which began in America in mid-2007, developed into a deep and protracted recession with associated negative social dimensions. One of the negative dimensions is that trust on buyer and seller expectations has provided a major impact on transactional and relational marketing dynamics.

Davut AteÅŸ (2010)-The author remarks that the crisis that began in mortgage credits in the middle of 2007 in the United States triggered a financial crisis starting from the middle of 2008 in the U.S. and Europe. At the end of 2008, real sector all over the world began to be negatively affected from the crisis.

Dick K. Nanto (2009) - 17. Dick K. Nanto (2009) - The author depicts that the world is near the bottom of a global recession, which is causing widespread business contraction, increase in unemployment, and shrinking government revenues. Although recent data indicate that the large industrialized economies may have reached bottom and are beginning to recover, for the most part, unemployment is still rising. Numerous small banks and households still face huge problems in restoring their balance sheets, and unemployment has combined with sub-prime loans to keep home foreclosures at a high rate. Several countries have resorted to borrowing from the International Monetary Fund as a last resort. The crisis has exposed fundamental weaknesses in financial systems worldwide, demonstrated how interconnected and interdependent economies are today, and has posed vexing policy dilemmas.

The process for coping with the crisis by countries across the globe has been manifest in four basic phases. The first has been intervention to contain the contagion and restore confidence in the system. This has required extraordinary measures in scope, cost, and extent of government reach. The second has been coping with the secondary effects of the crisis, particularly the global recession and flight of capital from countries in emerging markets and elsewhere that have been affected by the crisis. The third phase of this process is to make changes in the financial system to reduce risk and prevent future crises. In order to give these proposals political backing, world leaders have called for international meetings to address changes in policy, regulations, oversight, and enforcement. On September 24-25, 2009, heads of the G-20 nations met in Pittsburgh to address the global financial crisis. The fourth phase of the process is dealing with political, social, and security effects of the financial turmoil. One such effect is the strengthened role of China in financial markets.

The role for Congress in this financial crisis is multifaceted. While the recent focus has been on combating the recession, the ultimate issue perhaps is how to ensure the smooth and efficient functioning of financial markets to promote the general well-being of the country while protecting taxpayer interests and facilitating business operations without creating a moral hazard. In addition to preventing future crises through legislative, oversight, and domestic regulatory functions, The proposal focuses on five areas and includes establishing the Federal Reserve as a systemic risk regulator, creating a Council of Regulators, regulating all financial derivatives, creating a Consumer Financial Protection Agency, improving coordination and oversight of international financial markets, and other provisions.

Congress also plays a role in measures to reform and recapitalize the International Monetary Fund, the World Bank, on September 24-25. At the Group of 20 Summit held in Pittsburgh, world leaders agreed to make the G-20 the leading forum for coordinating global economic policy; not to withdraw stimulus measures until a durable recovery is in place; to co-ordinate their exit strategies from the stimulus measures; to harmonize macroeconomic policies to avoid imbalances that worsened the financial crisis; and to eliminate subsidies on fossil fuels (only in the medium term). In trade, there was only a weak commitment to get the Doha round of multilateral trade negotiations at the World Trade Organizations back on track by 2010, and for the International Monetary Fund, the leaders pledged to provide the "under-represented" mostly developing countries at least 5% more of the voting rights by 2011. The other large institutional change was the ascension of the Financial Stability Board, a group of central bankers and financial regulators, to take a lead role in coordinating and monitoring tougher financial regulations and serve, along with the International Monetary Fund, as an early-warning system for emerging risks.

Dimitris Hatzinikolaou(2010)- The author depicts about modifying slightly a standard neoclassical-synthesis macroeconomic model, which investigates the effects of an adverse supply or demand shock on output, employment, investment, prices, interest rates, and the exchange rate. The author focuses on the possibility of the magnification of these effects by the media, the politicians, and the political analysts, who induce herd behaviour by overstating the size of the shock. Such behaviour destabilizes the economy by magnifying the amplitude of the business cycle.

Dipo T. Busari and M. Adetunji Babatunde (2009) - The authors elucidate that there is a need to generate the required foreign exchange for growth of sub-Saharan Africa in order to meet the country’s needs. The events like economic slowdown in major advanced countries, financial crisis in major global financial markets and institutions, and general global credit squeeze has a adverse impact on fall in international prices of major primary commodities that are fuelling growth in Africa and other countries.

Doru Pleşea and Adina Liana Camarda (2009)-The author explains that the American business system might be defined based on private property and free will. Federal authorities’ intercession to economy exhibits throughout budgetary and monetary policies strategy. Meantime federal budget gets a constituent referring to investment in cereals. American economic legislation acknowledges government involvement in business practice control, American Government acting as economical increase supervisor. Although countries hereinabove are rejecting the American hegemony, their national identity is being defined pursuant to American prototype". Majority of specialists as being correct is appreciating the statement built on American industrial prototype emphasizing America as a world leader. The assertion hereby is based on U.S.A. present-day condition and this is not only about their economical potential but either about the established democracy, feature that qualifies U.S. as security and constancy pattern.

Dragan Mihajlovic and Suzana Zivkovic (2011)- The authors depict that all countries have felt the impact of the recession, the phase characteristic of negative effects such as slower economic growths (stagnation), high inflation rates and high unemployment rates. The economic crisis that has befallen even the most developed economies of the world is often compared to the crisis that happened in the 1930s, along with the attempts to pin down its causes in order to find the economic policy for its overcoming. Economic policy creators and policy decision-makers have to solve the question of how the crisis is to be overcome.

Eduard Ionescu, Riana Iren Radu (2010) - The authors highlight that the international financial and macro-economic frame of the current economic crisis is subjected to certain tensions yet remains relatively robust, even if there is a visible deceleration of economic growth in certain countries, the correlation between the price of actives due to the adjustment of the perception of risk is materialized, and the characteristics of the financial markets are significantly changed.

Fahri Apaydin (2011) - The author depicts the role of marketing during the economic recession becomes more significant than usual times. It is necessary to understand how firms should adjust their marketing strategies to handle with recessions. Although recessions have been studied primarily in finance and economics, there is a void in marketing literature about it. Recessions have significant effects on consumer behaviours and substantial impacts on firms, and these affect particular socio-demographic strata and business segments in different ways. The effects of recessions need to be examined both to cope with the ensuing problems and to get ready for prospective recessions.

Festus M. Epetimehin(2011)- The author quotes that the economic and financial crisis, which started in the United States in September 2008, has rattled markets and economies developed, developing and underdeveloped around the globe, and because the world is linked inextricably by globalization the crisis has continued to dominate discussions on global economy. Many countries are experiencing severe closure of companies, loss of jobs, crash of

Share prices; squeeze in consumer credit facilities, crumbling mortgage facilities among others. In the case of the developing countries of which Nigeria is one, the implications are noticeable in the areas of crash in share prices, dwindling revenues, few direct investments from developed countries, dwindling remittances from Nigerians abroad and possible erosion of foreign resources among others.

Florina Bran, Carmen Valentina, Rădulescu, Ildikó Ioan, Florentina Olivia Balu (2011) - The authors elucidated that it is important to develop the emerging economy in the wake of general economic crisis by giving a shape to the country/world. It can be concluded that the future shape of the country/world will depend more on vision of managers than on the influence of the so-called objective factors.

George Haralambie(2011)- The author explains that throughout the history, the dynamics of social development shows economies have experienced periods of boom and crisis, which were repeated at short, medium and long term, that induced the idea of cyclicality. The effects of the crisis were experienced in terms of investment, output and aggregate demand.

Gheorghe Vaduva (2010) - The author states that the financial crisis is big crisis of the system, with chaotic and unpredictable developments. They are an effect of creation and tendencies to autonomy of a system, which goes to become dominant and sovereign, but extremely vulnerable to the condition’s variation. The effects generated by the crisis are rolling on in complicated chains which trend to multiple in uncontrollable developments, to became radical and to explode starting economic, social and military collapses which multiplies the challenges, the defiance, the dangers and threats, amplify the vulnerabilities to these and increase, in a significant way, the risk level, crossing a lot over the strategic security level.

Gheorghe Voinea and Sorin Gabriel Anton (2009) - The authors explain that the current economic recession is the worst since the 1930s. The unprecedented global financial and economic crisis that started in 2007 had a profound impact on the work of international financial institutions. The reform of the international financial system represents an important topic nowadays. The authors try to explain the far-reaching reforms of the International Monetary Fund in order to address the global financial crisis and create reforms covering the following areas like lending framework, the IMF’s lendable resources, creation of a new international reserve currency, enhanced surveillance, and governance.

Gheorghe Zaman and George Georgescu (2009) - The authors explain the signs of recovery occurred in the developed countries by the end of 2009, but the question of sustainability is still uncertain. Romania was hit hard by the crisis in 2009, suffering a severe contraction of the economy, estimated at 7.1 percent. The worsening of the external and internal financial framework of Romania and the danger of a currency market crisis urged the need for a financing agreement with IMF. In the baseline scenario, assuming favourable economic circumstances, an exit of Romania from this risk zone could be possible by 2015. In the alternative scenario, an excessive burden of external debt compared with financing resources needed to comply with the external payments obligations would maintain Romania on the brink of default risk. Supplementary risks associated with unfavourable developments of the external context and with pressures coming from a non-restructured public debt could make the default situation even unavoidable.

Glynn Lowth and Malcolm Prowle (2010) - The authors find that there is very little optimism about the prospects for the UK economy in the short to medium-term. There is quite a degree of optimism from companies about their own commercial future based on a combination of factors such as accessing overseas markets, improving the way they do things, better customer relations, product innovation etc. The Businesses recognize the importance of having a robust business strategy to guide them through a recessionary period. However, what was done in response to the recession largely conforms to the emergent theory of strategy formulation discussed within. Although there have clearly been in-depth discussions and analysis about how existing business strategies might change, the changes made were largely amendments to existing strategies, with changes of emphasis, focus and timing. Most companies seem to be applying many aspects of a retrenchment approach to business strategy (e.g. reduced fixed costs, narrower product offerings, and reduced staffing) but there are also some aspects of an investment approach, which can be observed. However, the potential for these investment approaches is conditioned by concerns about getting access to capital finance. Both in terms of liquidity support and access to capital finance, there are concerns about the attitude of UK banks in relation to small to medium businesses. The Companies have identified several managerial areas where they felt the robustness and quality of the approaches being applied had been allowed to decline in recent years. Because of the challenges of a recession, urgent improvements have had to be or need to be made. The UK economy recently emerged from a long period of economic recession. The specific aims of the project were to obtain a perspective of how businesses of various types saw the recession in terms of length and depth, understand the impact of recession on the businesses and the actions they took in the short/medium term to deal with the challenges of recession, obtain a view as to how businesses might plan to change their business strategies to deal with the impacts of the recession and consider any management and financial management implications which ensued.

Gyorgy Simon And Gyorgy Simon Jr (2005)- The authors are using an endogenous growth model that has proven that an economic miracle did not happen in Japan .The very rapid growth proceeded in conformity with the general regularities of economic development. The main cause of prolonged recession, according to the empirical results, is the currency shock, occurred on the basis of an international agreement in the mid-1980s, which decelerated the hitherto extremely dynamic development of Japanese exports, considerably retarding the main factor of rapid economic growth.

Hete Roxana, Miru Oana(2008)- The authors depict that the financial crises that have emerged and developed in the recent decades have been characterized, mostly of an international dimension, with shocks quickly propagating through capital markets, through the international banking activities and through the money markets. Regarding the impact of the current crisis on the economy of Romania, the contagion effect was transmitted through several channels, but a proper framework in this respect was created by the internal context, mainly the excessive debt. To counteract the increasingly visible effects at the level of macroeconomic indicators, the measures taken by authorities have aimed primarily at the IMF support.

Hossein Askari and Noureddine Krichene (2010) - The authors remark that the world economy showed robust economic growth between 2003 and 2007, averaging about 4.5-5.5 percent per year. However, commodity price inflation re-emerged. Commodity prices had their rates increased of the post-war period with the price index of all commodities increasing at a rate of 23 percent per year between 2003and 2007. Crude oil prices increased fourfold to exceed $90/barrel in October 2007. The US dollar depreciated considerably between 2002 and 2007, with a depreciation of about 63 percent against the euro. Financial markets faced high uncertainty stemming from rising inflationary expectations, credit risk, and a depreciating dollar. The strong economic growth and accompanying inflationary trends were brought about by expansionary monetary policies in the leading industrial countries, particularly between 2002 and 2004, with central banks forcing interest rates to lower down. Credit expanded at a fast pace in major industrial countries. At the expense of creditworthiness and credit quality which was contributing in rapid increase in aggregate demand for real assets and for goods and services. While there was no limit for expanding demand for goods and services through credit expansion and through unlimited money creation, supply of these goods was however constrained in the short run by fixed factors, such as cultivable land or existing plants.

Ibrahim H. Garbie(2010)- The author explains that due to the existing depression, industrial enterprises in most of the world required to be reconfigured or reorganized especially the manufacturing firms (companies). There are many issues needed to be addressed to cope with this recession. The most important issue is) then the opportunity to learn new skills and techniques. The other issues were representing in complexity level of industrial enterprises, designing hybrid or innovative manufacturing systems, applied manufacturing strategies and philosophies, product development, management for change, and good accounting system.

Ioan Nistor, Mirela Pintea and Maria Ulici (2010) - The authors remark that the increase of financial crisis in 2008 helped to bring the recession in developed countries and the reduction of acceleration in the economies of emerging countries. Moreover, the degree of vulnerability in emerging countries has increased through their dependence of external financing. The negative developments in financial markets and the real economy determinates a volatile environment stressing the difficulties of forecasting the magnitude of the impact on short and medium term of the global crisis on macroeconomic developments in our country.

The year 2009 brought with it the decrease in the financial performances of the credit institutions especially due to the constitution of provisions for the outstanding loans. The provisions exploded at the beginning of the year, conditions in which banks have recorded losses in January and February and despite a slight recovery in March, the financial results turned to be negative.

Ileana Niculescu-Aron and Constanţa Mihăescu (2011) - The authors explain that both theoretical models and practical experience indicate a strong relationship between savings in a country, investment levels and economic growth. The economic recession caused by the financial crisis diminished the saving potential at national level in most European Union member states. Economic recovery requires investments, population savings that are the important source for their financing. Consequently, the analysis of the trends regarding population savings, knowledge about the determinant factors and saving behaviour is of special importance for the economic policy makers.

Iulian Viorel BraÅŸoveanu, Laura Obreja BraÅŸoveanu (2011). The authors have aimed to capture the effects of the current economic and financial crisis on fiscal variables. The impact of economic recession from the increase of unemployment to the relative stability of prices in the world. The overall macroeconomic developments characterized the current crisis, their effects on those developments in the public revenues and expenditures, in the conventional deficit and public debt, which are macroeconomic variables comprising the pentagon of economic macro stabilization.

Jan Kregel (2011) - The author quotes that most of the economists expect that the Great Recession produced by the financial meltdown of 2008 would usher in a resurgence of traditional Keynesian economics. The traditional Keynesian demand management policies seemed to be the obvious response to the rapid decline in output and rising unemployment that quickly followed the paralysis of short-term money markets, and liquidity preference of financial institutions that left the business firms without the borrowed funds that were necessary to meet their current expenses and to pay wages. There raised an urgency of the financial crisis to produce an emergency response in the form of the Troubled Asset Relief Program in early October 2008 to accompany the Federal Reserve System’s support.

Jasmine Kaur (2010) - The author emphasises that recession is the much talked about topic now a days in every sphere of work-field across the globe. It refers to the state of an economy when it is having a negative growth rate. It is the result of reduction in the demand of products in the global market over a sustained period. Recession has had a negative effect on India on Share market, Real estate IT and Industrial sector leading to increased lay-offs, unemployment etc.

John Sargis and Takis Fotopoulos(2008)- The authors remark that the credit crisis, which began reaching its peak with the central banks around the world pumping some $323 billion into the system to keep it liquid, with stock exchanges’ values falling and the most important central banks in the world jointly and massively intervening in the intra-bank market. However, despite these increasingly desperate attempts to avoid a more crisis, or at least to minimise the effects of the present crisis, today, some analysts foresee the possibility of collapse of the banking system followed by a world recession similar to that of Great Recession.

John Walsh(2010)- The author explains that the Southeast Asian labour markets are characterized by the diversity of the countries of which they are part and by the historical antecedents of colonialism that have largely given them their nature. Most have adopted a form of the export oriented, import substituting low labour cost manufacturing paradigm of economic development known as the East Asian Economic Model. Having already passed through the Asian Financial Crisis of 1997 and its disruptive effects, workers in the region are facing a different set of challenges as a result of the present ongoing crisis which include the structural changes to the East Asian Economic Model and the possibility of public unrest in the continuing absence of genuine democratization across most of the region. The great discovery of Southeast Asian governments in the late 1960s was that their diverse populations (were rather uniformly hardworking and would happily toil through the day and night in factories making clothing, shoes, appliances and electronics. Government needed only to woo investment most of it foreign with full ownership rights for production facilities, tax breaks and central bank intervention to keep local currencies undervalued and hence keep the exports cheap. The proposition was irresistible for cost cutting multinationals and spawned globally competitive, but small scale local businesses had to provide components, contract manufacturing and support services to anything from making models for toy moulds to packaging semiconductors to cleaning multinationals factories.

Jone Kalendiene and Giedrius Miliauskas (2011) - The authors discuss the concept of competitiveness of economy and analyzes the export as an indicator of it. Different export market orientation and manufacturing sector’s longer reorientation process provide an explanation. It revealed that there was high dependence of trade on conjuncture in foreign markets and it supported the need of further price and non-price competitiveness analysis.

Jordan and Rolf (2009) - The authors remark that due to the current economic downturn, the Singapore has experienced one of its most severe recessions since independence. The financial crisis, which caused a fall in prices, at most of the world’s leading stock exchanges and a sharp decline in industrial production led to a negative impact on the city-state’s export-dependent economy.

Jude Esguerra (2007) - The author explains that the Asian crisis has done more than to keep Filipinos from spending unwisely. If the region-wide recession was no longer sufficient proof of how bad things are, one should consider the facts kept hidden in unemployment figures. The official line maintains that the Philippine economy is in good shape; good enough to significantly bring down 1998 first quarter unemployment figures into impressive second quarter ones. What is not made plain is that the number of unemployed Filipinos looking for work did not include those who were retrenched and those who had given up on the shrinking job market. In truth, the crisis did more than just downsize the workforce; it has also exposed the shortcomings of government and the Central Bank in handling the effects of the crisis. On vital fiscal policies, the administration appears to be at odds with itself. Not assured of sound sustainable investment conditions and consumer demand, businesses are left with very little prospect of reopening their factories and shops until the region recovers from the crisis. This makes for an economic disaster that hits labor.

Junk ova S E. Matuskova (2011)-The author remarked that the Czech Republic entered the crisis with relatively good starting conditions, which showed no significant macroeconomic imbalances, and the financial system was not destabilized. However, the crisis declined the GDP in 2009 to 4.1% due to economic recession in the Euro zone.

Kathleen Patterson & Gray Oster (2008), the authors highlight that the global economic crisis has brought to the forefront of organizations the concepts of viability and survival, which at these times can be desperate pursuit. There are three main reactions in organizations, namely the corporate reactions in organizations, namely the corporate reaction to remain viable, the employee reaction to survive the turbulence, and the human resources reaction including recruiting and hiring talent, corporate organization, training and institutional learning.

Kalim Siddiqui (2009)- The author explains that the Japan, the world’s second largest economy is experiencing the worst economic crisis since the Second World War and the government is attempting to avoid a return to the "lost decade" of the 1990s when it was stuck in a deflationary spiral. To fight back recession, the Bank of Japan has kept the interest rate to 0.1 %, even lower than Bank of England’s 0.5 %. Japan’s economy has grown only at an average of 1% annually since 1992. The country’s economic miracle of the 1950s and 1960s has encouraged debate among the scholars to the significance of Japan’s economic past. It is widely seen as due to different model of development in areas such as industrial organisation, the role of the state, social institutions and history. Her appeal lies in the dramatic growth rates and economic transformation. Japan was first Asian country to break the western monopoly of modern industrialization.

Kalim Siddiqui (2009) - The author quotes that the current financial crisis has an impact on the growth, trade and employment in emerging market economies (EMEs) namely China and India. The emerging market economies are characterized as transitional, which means that they are in the process of moving from a closed to an open market economy. It is said that by adoption of neoliberal policies, the economy will lead to a better economic performance levels, as well as transparency and efficiency in the capital market.

Kehinde Oladele Josepha and Ogunnaike Olaleke Oluseyea (2011), the authors remarked that Global economies around the world have experienced the most traumatic moments in the last one-decade. The crisis has been described by scholars, as perhaps been the worst financial crisis since the great economic depression of the 1930s. This paper lucidly examines the effects of global economic recession on the development of human capital with reference to Nigeria nation. The paper offers useful policy recommendations, which include the need for government and appropriate agencies to put in place policies such as enabling environment that will lead to the growth and development of human capital in Nigeria. Government needs to put forward policies that minimize cost at all levels, maximize efficiency of output, training and retraining of goods hands; and that there is need to encourage better motivation of workers at every sector of the economy amongst others.

Khan A.Q and Mariyam Mehtab (2010) - The authors remarked that during 2008-2010, it has been highly turbulent for the world economy, which has hit hard by a profound financial crisis. It is being apprehended as the worst ever crisis to hit the world economy since the Great Depression of 1930’s. The rumours are flying thick and people all around the world are gripped with a sense of fear and panic. Future is uncertain and economic analysts are failing to come up with an answer as to how long the recession would last.

Lester M. Salamon, Stephanie L. Geller, and Kasey L (2009) - The authors remarked that the current recession had already resulted in serious economic costs for our nation. Although the media has focused on the downturn’s severe effects on businesses, there has been little attention on how it has affected our country’s critical non-profit sector. The current recession has already resulted in serious economic costs for our nation, with 9 percent of the workforce unemployed and significant reductions in corporate profits and stock valuations.

Lixia Wang, Iftikhar Hussain (2010) - The authors examined the financial crisis and their impact on world economies, particularly China. The study compared the Southeast Asian financial crisis and the recent US based crisis of subordinated debt conduction in Chinese context. Then, it analyzed the impact of financial crisis in three areas the economic growth potential, social conflicts and responding to risks. There is a need for stable economic growth to expand domestic demand to compensate for the decline in current account surplus.

The financial crisis in developed countries has traumatized all world markets. Consequently, the world economy is facing the most severe slowdown since the 1930s. The economic decline following the financial crisis primarily caused lower growth rates in developing countries. The consequence of banking crisis in rich countries and emerging markets has common impacts. There are broadly similar patterns in housing and equity prices, unemployment, government revenues and debt. In some developing countries, the effects have been much more severe than in the developed countries.

Magdalena Dediu (2009) - The author explains that the world economy is under recession. The strong financial turbulences, the collapses of the main stock exchanges with global extension, the global real estate crisis and alimentary problems represent the signs of a fundamental correction within the global economy. To tackle the unprecedented economic storm, governments across the world have been spending trillions of dollars on economic stimulus packages to combat the recession, prompting a debate about how eventually to unwind this support.

Mario D. Nuti (2009) - The author remarks that all forecasts for transition countries since mid-2008 have been repeatedly downgraded. The latest forecasts envisage an average income decline of 5 per cent in 2009 and only a small recovery of 1.4 per cent in 2010. The performance is very diverse. In general, transition countries faced two shocks a sudden stop, reversal of capital inflows, and an exports collapse due to the global slump. More specific factors include homemade sub-primes (domestic loans to households, enterprises and governments originally denominated in foreign currency), external imbalances, worsening terms of trade for primary products exporters, fall or reversal of FDI, portfolio investment inflows, funds withdrawal by foreign banks, external demand reduction, differences in initial positions and policy response.

Mario Sarcinelli (2010)-The author elucidates that hedge funds could provoke a crisis, probably because they had remained due to American influence, outside the scope of any direct regulation, subject only to the surveillance of the banks that provided them credit, or because the system had run a serious risk in 1998 when a sudden liquidity crisis forced the creditor banks, prodded by the New York Fed, to bailout LTCM in extremis. There have been many financial crises in recent centuries, with wars we tend to think that the horror of the last will prevent the next, and so for financial crises we believe the errors that provoked the most recent one will not be repeated in the one to follow. Supposing that the same errors will be avoided, others will be committed; the unstoppable push for innovation, the change of generations and the fading of historical memory will determine the conditions of a new crisis. We can only try, through the institutional structure of control, to make them less frequent, less disruptive, and more manageable.

Matiur Rahman, Muhammad Mustafa(2009)- The author depicts that this paper is an exploration of the primary reasons for current U.S. great recession, its global transmission, major economic and financial programs, future challenges, and exit strategies. The root cause lies in the U.S. real estate market debacle due to massive subprime lending and proliferation of mortgage-backed securities. The real estate market trouble spilled over into U.S. major banks and other financial intermediaries as well as financial markets. Due to rapid financial globalization, the U.S. financial meltdown and deep recession caused damages to other major economies in the world. Worldwide major economic and financial programs saved the world economy from further deterioration, and set a stage for uncharted nascent recovery. There are dangers of high global inflation in the future with chance of double-dip recession if exit strategies are applied untimely to withdraw excess liquidity in inappropriate doses.

Mehta D, Naveen K. Mehta and Rishi Mishra (2010) - The authors elucidate that no business activity can be completed without effective business communication network. The stage of economic turmoil is the most important time for any organization to regroup its strategy. Now, strong, transparent and constant internal and external communication networks play a vital role. The global meltdown is a blessing in disguise for the organizations to invigorate their business communication network.

Michael Adeloye Adebamowo (2011) - The author remarks that the global structural defect in the economy will eventually affect all the aspects of our lives and existence, which might influence the environment particularly in the aspect of Sustainable Housing development. The economic recession doesn’t just occur but certain factors like dollar collapse, oil price rise, inflation, housing bubble, loss of consumer confidence, excess buying and global economy are responsible. The current global financial meltdown that began with the US housing bubble in 2006 was aggravated by low interest rates and increased global liquidity. The subprime or near-subprime loans being initiated and sold to banks by the US real estate brokers, as well as the hedge funds, the Structured Investment Vehicles (SIV) and financial instruments such as Collateralized Debt Obligations (CDO), Credit Default Swaps (CDS) and other derivatives were the bane of the crisis. Other factors included the under estimation of the liquidity risk and the employment of short-term oriented incentive schemes. A combination of these factors imposed deleterious effects on the US financial system, which in turn, was translated into the global economy, owing to the wrong decision by the US Government not to intervene at a most crucial time. In view of this, much of the global economic crisis is traceable to inefficient regulation of financial actors as well as the needless post-crisis foot-dragging in Government intervention, which made the meltdown that could have been limited to the US economy, to snowball into a global financial dilemma. The far-reaching implication of this US-induced economic quagmire is manifest in a host of recession symptoms, which have already spread not only to other developed economies of the world but also to emerging or transition economies.

Michael M. Goldman (2011) - The author explains that the impact of economic

recessions on business strategy and marketing had recently received increased research attention. However, these contributions were limited, especially with respect to sports marketing businesses and those operating in emerging markets. The main aim of the study was to examine the impact of the global recession on the business model of sports marketing businesses in South Africa. The results of the research pointed to business model shifts, influencing the customer value proposition, agency relationships, revenue models and staffing approaches of sports marketing firms. Theoretical and practical implications were discussed to revisit the business model upon which sports marketing businesses could compete in a post crisis world.

Mihaela Carmen Muntean, Costel Nistor, Rozalia Nistor, Paolo Panico (2011) - The paper aims to present the effect that there are financial tensions in countries with developed economies on emerging economies. Because many economies have entered into recession, this has resulted in significant slowing of economic growth. The objectives are related to the presentation of the current global economic situation, the rapidity with which it converts the entire world into financial crisis. In addition, there are levels of trade flows, financial and monetary, the financials tensions, effect in developed economies and emerging economies, financial ratios and analysis, their composition and relations between them.

Mihaela Neculiţă and Daniela Şarpe (2010) - The authors remarked that the world economic crisis is a system crisis that has deep implications on country groups. For the developed countries, the crisis means the diminishing of the economic increase rhythm, reduction of new work places creation, unemployment increase, deepening of social tensions and a diminishing of the work productivity increase. Moreover, there can be a sustained pressure over the social assistance and protection, over the living level increase and of the antisocial phenomena increase. On the other hand, there is a counter-pressure from these countries to maintain certain advantages they have due to the integration policies, advantages that were brought about by the international work division, by the international economic relations based on the comparative cost theory, intensification of armament production and of technical progress of the world finances.

Muhamad Abduh, Mohd Azmi Omar and Jarita Duasa (2011) - The authors explain that the nature of Islamic banks is different from conventional banks, which may lead to different deposit behaviour of their depositors. The study aimed to analyze the dynamic effects of interest and profit rate changes, production level, inflation and financial crisis towards the fluctuation of total deposits in Islamic banks. Meanwhile the inflation had negative effect on total deposits of Islamic banks, which reflected the changes on depositors’ consumption pattern during the recession. Interestingly the financial crisis was positively affecting total deposits in Islamic banks. It indicated that due to the 1997/1998 financial crisis experience the bank depositors had trusted Islamic banking to be more resilient in facing financial crisis and hence the inflow of deposits to Islamic banks was happened during 2007/2008 financial crisis.

Mujtaba (2008) - The author highlights that the financial downturn that is affecting developed economies is likely to get worse as the European countries, the US and others go into a deeper depression due to the increase in Job losses, which often follows recession. The slump in the market and increased job losses will have some important implications for the changing tasks of human resource professionals. As the unemployment continues to increase, HR professionals are likely to be dealing with more stressed employees who are the sole wage earners in their families.

Muthe. P.R(2009)- The author quotes that almost everybody today seems to be discussing about Recession its impact on emerging countries because almost all business sectors have been more or less affected by this Global recession. The current wave of US recession has made every Nation to look inwards to think seriously regarding impact of recession on different sectors of their economy. The Indian economy is consist of majorly three sectors 1) Primary sector ( known as Agriculture ) , 2) Secondary sector ( known as Industry ) and 3) Tertiary sector ( known as service sector ) which service sector recently alone contribute 55.1% of Indian GDP.

Mutu Simona and Matis Eugenia(2007)- The authors explain that in order to measure the liquidity risk they have developed an analysis model, based on stress-testing scenarios that shows the ability of the bank to face different types of liquidity crisis. The scenarios were designed for each balance sheet position for assets and liabilities: Ordinary Course of Business, Name Crisis (Mild Name Crisis and Severe Name Crisis), Market Crisis (Mild Market Crisis and Severe Market Crisis) that reflects banking sector crisis and persistent recession. This offered a dynamic image about the bank’s liquidity in report with different types of liquidity scenarios, but also about the time horizon of analyze. The research also wanted to highlight the most significant features to consider in order to implement an effective liquidity risk management and to achieve a more integrated supervisory framework.

Neda Kassaipoura, Mehdi Taghavib and Maryam Ghadimic(2012)- The author explains that this paper presents an empirical study on measuring the effects of fiscal policy in terms of government spending on private consumption in both recession and booms over the period of 1965-2010. The proposed study uses Hodric-Prescott filter to find the cycle of recessions and booms and use autoregressive distributed lag model to estimate the changes. The results of this survey indicate that, in long term, an increase on government expenditures normally affects private sector positively in both recessions and booms. The impact in short terms is positive during the recessions but during the booming session, there is no meaningful relationship between government spending and private spending.

Norikatsu Hiraide and Kalyan Chakraborty (2012) - The authors explain that the world economy has been severely affected by the global recession, which started from the second quarter of 2007 triggered by the financial crisis. The auto industry in the U.S. faced the most severe difficulties, which threatened its survival after the recession. The study found that the demand for automobiles in the U.S is positively related to non-farm employment and single-family housing start and negatively related to gas price and vehicle price.

Oana Raluca Ivan (2009) - The author reviews the evolution of external audit in some European countries and considers how this is likely to affect auditing in the future due to Global recession. The analysis shows how the European Commission has recently concentrated its harmonization focus on the consolidated accounts of listed companies and the use of International Accounting Standards. It is probable that this trend will continue and in the short term will cause changes in the arrangements for external overview of the audit and in national auditor rules.

O’Hara Anthony Phillip (2011) - The author scrutinizes the technical international policy reactions to the subprime crisis and recession. The Short-term policy responses present challenges to the conservative policies of the 1980s-2000s, while long-term policy structures to redirect governance significantly. The Macro-prudential policy includes systemic risk and debt problems arising from booms in the cycle. The Monetary policy considers asset price instability as well as inflation. The Fiscal policy forms the global money and reduces the international payment instabilities that are now a core element of policy. While there is still some asymmetry in policy, international financial crises can be useful in moderating ceremonial policy structures.

O’Hara Anthony Phillip(2012), The author highlights that Return On Assets provides a foundation for long-term growth as a type of fundamental variable, and that this growth provides a buffer against systemic risk in the sense that the implications sustainable growth provides resources for debt provision and employment stimulation. The emergence of a viable Return on Assets forms crucial for long waves of growth, which stimulates both private sector profit and public sector tax receipts, which reduces the structural deficit for both the sectors. A low rate of long-term growth provides a good indicator of the emergence of "long wave systemic risk" which has left the nations vulnerable to uncertainty, financial crisis and recession.

Peter J. Montiel (2011) - The author remarks that the experience of the Great Recession suggests that important benefits may have been neglected over the growth benefits of reform. Especially, in contrast with previous international recessions, recovery from the Great Recession has been led by emerging and developing economies, many of which have implemented significant reforms over the past two decades.

Peter Kuzmisin (2010)- The author explains that the economic recession between the years 2008-2009 had significant effects on the areas of manufacturing, investments, foreign trade, employment and public finances and many of the impacts can still be seen. The forecasts of the IMF (International Monetary Fund), OECD (Organisation for Economic Co-operation and Development) and European Union (EU) anticipated that in 2010 and 2011 the growth of the World GDP should be higher than 4%. The most adverse impact of the recession is the unemployment with its economic and social manifestations. Due to the increase in unemployment, household incomes have either decreased or disappeared completely, which led to lower consumption, lower GDP, worsening credit repayments, especially with mortgages, which in turn increased bank losses and worsened the situation at the real estate market. IMF ((International Monetary Fund), therefore, emphasizes the importance of economic growth restructuring in the way that the economies with significant surpluses in current account strengthen their domestic demand and exchange rates, whereas the economies with deficit in current account should focus towards the strengthening of exports through enhancing the structural reforms.

Placier Klara (2011) - The author describes that due to the recent economic decline, the overall attitude of companies towards socially responsible activities have been affected.

Prokopijevic Miroslav (2010) - The author argued that the current euro zone crisis is neither new nor surprising. Fiscal discipline in the euro zone was weak from its creation in 1999, but ongoing economic prosperity limited the damage. Economic recession deepened the impact of crisis on public finance and pushed some euro zone countries to the edge of bankruptcy. Options available now are costly and painful: foreign bailouts, cuts to expenditures, higher revenues and some combination of the three. They may be conducted both inside and outside the euro zone. If euro zone problems are not solved, financial markets may turn down the euro as a currency, possibly marking the beginning of Euro-disintegration.

Raymund Jose G. Quilop (2007)- The author remarks that when the baht plunged to unpre