Thoughts on policies and the policy framework after a financial crisis

Attention from policymakers tends to concentrate on the short-term effects of crisis policies
on growth and financial stability. This paper investigates side-effects of current crisis policies
from the perspective of the classic debate between Keynes and Hayek. It argues that three
issues remain largely unaddressed: a lack of confidence, a distorted structure of the
economy and policy framework, and too high debt levels. Continuing expansionary and
unconventional policies may be counterproductive and it may be better to shift the focus of
policies towards real and financial adjustment.