Found 423 article(s) in category 'Q3: Financial Crisis?'

A Decade of Debt

A Decade of Debt. Carmen M. Reinhart, Kenneth Rogoff, 2011, Paper. “This paper presents evidence that public debts in the advanced economies have surged in recent years to levels not recorded since the end of World War II, surpassing the heights reached during the First World War and the Great Depression. At the same time, private debt levels, particularly those of financial institutions and households, are in uncharted territory and are (in varying degrees) a contingent liability of the public sector in many countries. Historically, high leverage episodes have been associated with slower economic growth…” Link

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A Macroprudential Approach to Financial Regulation

A Macroprudential Approach to Financial Regulation. Jeremy Stein, Samuel Hanson, Winter 2011, Paper. “Many observers have argued that the regulatory framework in place prior to the global financial crisis was deficient because it was largely “microprudential” in nature. A microprudential approach is one in which regulation is partial equilibrium in its conception and aimed at preventing the costly failure of individual financial institutions. By contrast, a “macroprudential” approach recognizes the importance of general equilibrium effects, and seeks to safeguard the financial system as a whole. In the aftermath of the…” Link

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Fire Sales in Finance and Macroeconomics

Fire Sales in Finance and Macroeconomics. Andrei Shleifer, Winter 2011, Paper. “Analysts of the recent financial crisis often refer to the role of asset “fire sales” in depleting the balance sheets of financial institutions and aggravating the fragility of the financial system. For example, a report from the U.S. Treasury (2009) held: ‘An initial fundamental shock associated with the bursting of the housing bubble and deteriorating economic conditions generated losses for leveraged investors including banks…The resulting need to reduce risk triggered a wide-scale deleveraging in these markets and led to fire sales.’ Similarly, a discussion of…” Link

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Optimal tax and debt policy with endogenously imperfect creditworthiness

Optimal tax and debt policy with endogenously imperfect creditworthiness, Ricardo Hausmann, December 9, 2010, Paper, “This paper studies the patterns of optimal tax rates and borrowing in a developing country characterized by a costly tax collection. Its access to the international credit market is determined by the efficiency of the tax system, the relative bargaining power of creditors, and the outstanding debt. Country risk modifies considerably the pattern of taxes and borrowing in recessions. The tax rate exhibits strong counter-cyclical patterns in economies operating close to the credit ceiling, whereas the tax rate exhibits very few cyclical...”  Link

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Making the Numbers? ‘Short Termism’ & the Puzzle of Only Occasional Disaster

Making the Numbers? ‘Short Termism’ & the Puzzle of Only Occasional Disaster. Rebecca Henderson, November 2, 2010, Paper, “Executives at public companies are always under pressure to “meet the numbers” each quarter, often so much so that they sacrifice long-term investments in order to make everything look rosy in the short term. In this paper, Harvard Business School professor Rebecca M. Henderson and Sloan School of Management professor Nelson P. Repenning set out to reconcile the apparently contradictory strategies of short-term results and long-term investments.Link

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Housing Policy in the Wake of the Crash

Housing Policy in the Wake of the Crash. Edward Glaeser, Fall 2010, Paper. “Between 2000 and 2010, the U.S. housing market experineced a convulsion more extreme than in any previous recorded cycle. From May 2001 to May 2006, the Case/Shiller Standard & Poor’s twenty-city housing price index, which controls for changes in housing quality by comparing prices from repeat sales of the same homes, rose 54 percent more than consumer prices rose. In the three years that followed, housing prices, measured by the same index and corrected for inflation, fell more than on-third...” Link

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Is Our Financial System Serving Us Well?

Is Our Financial System Serving Us Well? Benjamin Friedman, October 12, 2010, Paper. “In 1772, at the height of Scotland’s worst banking crisis in two generations, David Hume wrote to his close friend Adam Smith. After recounting the bank closures, industrial bankruptcies, spreading unemployment, and even growing “Suspicion” of the soundness of the Bank of England, Hume asked Smith, “Do these Events any-wise affect your Theory?” They certainly did. Smith’s analysis of the role of banking in The Wealth of Nations, published just four years later, clearly reflected the lessons he took away from the 1772 crisis. In contrast to the doctrinaire…” Link

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The Structure of Tariffs and Long-Term Growth

The Structure of Tariffs and Long-Term Growth. Nathan Nunn, October 2010, Paper. “We show that the “skill bias” of a country’s tariff structure is positively correlated with long-term per capita GDP growth. Testing for causal mechanisms, we find evidence consistent with the existence of real benefits from tariffs focused in skill-intensive industries. However, this only accounts for a quarter of the total correlation between skill-biased tariffs and growth. Turning to alternative explanations we extend the standard Grossman-Helpman “protection-for-sale” model and show how the skill bias of tariffs can…” Link

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Reconstructing Economics in Light of the 2007-? Financial Crisis

Reconstructing Economics in Light of the 2007-? Financial Crisis. Benjamin Friedman, September 29, 2010, Paper.“The lessons learned from the recent financial crisis should significantly reshape the economics profession’s thinking, including, importantly, what we teach our students. Five such lessons are that we live in a monetary economy and therefore aggregate demand and policies that affect aggregate demand are determinants of real economic outcomes; that what actually matters for this purpose is not money but the volume, availability, and price of credit; that the fact that most lending is done by financial institutions…” Link

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Securitization, Shadow Banking, and Financial Fragility

Securitization, Shadow Banking, and Financial Fragility. Jeremy Stein, September 24, 2010, Paper. “I describe how the market works: how pools of loans (for example, mortgages or credit-card and auto loans) are packaged and structured into ABS and how investors such as hedge funds, pension funds, and broker-dealer firms finance the acquisition of these ABS. […] I outline the economic forces that drive securitization; these include both an efficiency-enhancing element of risk-sharing and a less desirable element of banks trying to circumvent regulatory capital requirements.” Link

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