Global crisis encompasses situations whose origins and impacts cannot be confined inside the boundaries of individual nation states, such as the financial crisis of 2008, climate change, or the COVID-19 pandemic. In contrast to local crises that are largely confined to local communities, these global challenges require international cooperation and governance efforts (see Cottle, 2011).
A key feature of these global challenges is the way they trigger and exacerbate local economic problems. For example, rising food and energy prices can reduce household purchasing power while tightening credit conditions impose higher borrowing costs on businesses and individuals. These effects can feed into each other, creating vicious cycles that depress incomes and erode well-being.
To mitigate these negative impacts, governments embraced policy tools that went beyond their traditional fiscal responses to domestic recessions. They increased government spending to stimulate demand and employment; guaranteed deposits and bank bonds; purchased ownership stakes in banks to help them restore confidence; and adopted a number of quantitative easing policies (e.g., asset purchase programs by central banks). However, these interventions aggravated preexisting economic problems in many countries, including weak productivity growth and high debt levels that constrain governments’ ability to invest.
These global challenges also raise the issue of whether people hold international or national institutions more responsible for a crisis’ local impact. Psychological theories of blame and sociopolitical theories of institutional trust and governance propose different explanations for cross-country differences in locus attributions. One posits that consumers in countries with a disproportionately high local impact from a global crisis will blame both national and international institutions more than those in low-local impact-countries.