The 'return of big government'? : The financial crisis of 2007

Absztrakt (kivonat)

In this paper, we examine the effect of the financial crisis from 2007 onwards, on the size of government from the UK and US perspective. We hence consider the effects of enacted government measures through bank bailouts, national deficits, national regulations and international regulations. Bank bailouts were not only validated by the initiative of restoring trust and demand in the national economy but also proved to be greatly influenced by sectoral interest. The surging deficit is the logical result of excessive government expenditure aiming to restore demand and investment. However the longevity of these measures is unclear. Acting too late or too early can further depress the economy. Regulative measures were taken place on the national level to sustain the economic growth that has started aiming to address the core problems of the financial system. The success of these remain to be seen. In terms of international regulation a clear path can be observed towards greater global cooperation. From the result of our findings, we can claim that big government is back, however it is impossible to predict the longevity or direction of it.