ABSTRACT
The Great Recession in 2008 hit Iceland earlier, more suddenly and harder than most other countries. The outsized economic shock is the country’s biggest crises since gaining independence in 1944. Remarkably, the combined bankruptcy of the three major banks ranks as the third-largest bankruptcy in world history. An astounding statistic for a country of around 350,000 inhabitants. This book is dedicated to evaluating the extent to which the Great Recession led to changes in the Icelandic party system and politics. Studying political developments after those dramatic events allows us to assess different perspectives and evaluate to what extent the changes we observe are driven by the crisis. By doing so, we contribute to the growing literature on the political consequences of economic crises in modern democracies. In this introductory chapter, we outline the theoretical framework used to understand developments following the collapse of the Icelandic financial system, focusing on how and why such economic crises as the Great Recession impacts politics, both short term and in the long run. We explain why the Icelandic case is interesting and important and we compare the Icelandic experience with other crisis countries in Europe.
