Are economic recessions inevitable?

““We believed there was a possibility of institutional failure in the banking and financial system so we did all sorts of exercises, stimulation exercises. But what we didn’t see, and nobody saw, was the possibility of complete market failure, that markets seized up across the world.”

Gordon Brown, speaking on Friday on the day when the UK officially fell into a recession

The title for the 2009 Royal Economic Society’s essay prize for young economists provides entrants with a wonderful opportunity to explore the dynamics of economic cycles and external shocks, the challenges facing policy-makers when events turn nasty and the consequences of years of financial euphoria and excess. The question can be approached in many different ways but every student will have to stay firmly within the 2,000 word limit. This is an essay competition that rewards a neat turn of phrase, a confident handling of economic ideas and an ability to build and sustain and argument with clarity, precision together with a strong awareness of recent events.

How will you interpret the meaning of a recession?
What are the causes of turning points in the business cycle?
What causes a slowdown to become something worse?
Which domestic and external events have proved decisive for the UK and other economies over the last few years?
Was a recession inevitable after the credit crunch and the surge in global food and energy prices?
Have policy-makers made mistakes? If so which ones and with what consequences?
Can behavioural economics contribute to an understanding of consumer and business decisions at different stages of the cycle?
To what extent is the current recession an inevitable product of a decade or more of rapid globalisation?
Are recessions largely home-grown or can responsibility be laid at the door of international factors?
How can different schools of economic throught contribute to our understanding of the causes of recession?
How can recessions be avoided? Do the standard tools of macroeconomic management work any longer?

These are just a few early thoughts - I am sure you will think of other aspects to consider. Events are moving extremely quickly at the moment
so by the time you might be ready to send through your entry, we may well have fresh perspectives on the causes of the global downswing and the strategies that countries and governments are scrambling to put in place to avoid a collapse in production, jobs and living standards.