Introduction

Abstract

The financial crisis that began in the summer of 2007 turned into the worst economic crisis since the Great Depression of the 1930s. The crisis began in the financial sector, but has since spread throughout the economy. National income levels are well below trend and unemployment rates are double their pre-crisis level. In many countries households and governments remain burdened by high debt levels, which prolong subdued demand. In the euro area the crisis morphed into a sovereign debt crisis, laying bare the dysfunctional nature of the European economic policy regime.