The banking crisis might have caused a recession, but what turned that recession into The Great Recession in Europe and the US was too tight money: nominal GDP just fell off a cliff.
India was further away from the dreaded 'zero bound' on interest rates, and never had any problem generating enough nominal GDP. (India's problems are with the real part of the economy. So they are producing too much inflation.)
The Fed and ECB also have clever people. They still made mistakes--especially when evaluated with the benefit of hindsight.
>The banking crisis might have caused a recession, but what turned that recession into The Great Recession in Europe and the US was too tight money: nominal GDP just fell off a cliff.
Was going to ask what nominal GDP is, but googled it, it seems it is GDP without being adjusted for inflation. Okay.
By "too tight money" do you mean less money available for business investment, or higher interest rates for borrowing it, or something else?
>India was further away from the dreaded 'zero bound' on interest rates, and never had any problem generating enough nominal GDP. (India's problems are with the real part of the economy. So they are producing too much inflation.)
Okay, this second paragraph seems to indicate that nominal-GDP-wise, India was okay, but it was not okay after adjusting the GDP for inflation?
I doubt they did only that, or even that. The RBI (Reserve Bank of India) and the Indian finance ministry have some well-educated and experienced economists (some even with Harvard / Oxford type backgrounds, or at least were earlier) (though I'm not saying they are perfect, no one is). Even without being a finance professional or economist myself (though I did take a year of Economics in 11/12th grade), I can tell that (mainly gut feel or educated guess, of course).
A sort of caveat or counter to what I said above, though (and what you said as well) is that (IMO) no economist fully knows what they are doing, partly because the field is so complex (dealing with economies of nations or the world, after all), and partly because economics is not a science like the physical sciences are (and hence not perfectly predictable, even if you have a supercomputer), not matter how hard proponents of that try to claim so. It's not called The Dismal Science for nothing ...