Found 418 article(s) in category 'Q3: Financial Crisis?'

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

Tags: , ,

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

Tags: , ,

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

Tags: , , ,

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

Tags: , , ,

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

Tags: , ,

Three Challenges Facing Modern Macroeconomics

Three Challenges Facing Modern Macroeconomics. Kenneth Rogoff, Paper, September 21, 2010. “There are three great challenges facing researchers in modern macroeconomics today, all brought into sharp relief by the recent financial crisis. The first is to find more realistic, and yet tractable, ways to incorporate financial market frictions into our canonical models for analyzing monetary policy. The second is to rethink the role of countercyclical fiscal policy, particularly in the response to a financial crisis where credit markets seize. A third great challenge is to achieve a better cost‐benefit analysis of…” (May require user account or purchase) Link

Tags: , , ,

Basel Needs a Firm Hand and Fewer Delays

Basel Needs a Firm Hand and Fewer Delays. Jeremy Stein, David Scharfstein, September 13, 2010, Op-Ed. “This weekend top central bankers announced agreement on Basel III, the new rules to enhance global capital standards for banks. The agreement, which will now be presented to the Group of 20 leading nations summit in Seoul this November, represents a significant and welcome increase in the capital that banks will be required to hold. However, worries that a rapid transition will cut lending and deepen the global recession mean the full increase will be delayed until 2019. These transitional…” (May require user account or purchase) Link

Tags: , , ,

Causes of the Financial Crisis: Many Responsible Parties

Causes of the Financial Crisis: Many Responsible Parties. Richard Zeckhauser, June 2010, Paper. “This analysis argues that blame for the financial crisis falls specifically and heavily on a broad range of the private players and public regulators in our financial sector. Wall Street and the government joined hands in a situation of contributory negligence. Even recognizing the triggering event of the collapse of the subprime market, a key question arises: How did a relatively small loss – $1 billion in subprime mortgages – initiate such a gigantic loss amounting to $20 trillion? By contrast, the NASDAQ swoon of 2001-02, though entailing…” Link

Tags: , , , ,

Growth in a Time of Debt

Growth in a Time of Debt. Carmen M. Reinhart, Kenneth Rogoff, May 2010, Paper. “In this paper, we exploit a new multi-country historical dataset on public (government) debt to search for a systemic relationship between high public debt levels, growth and inflation. Our main result is that whereas the link between growth and debt seems relatively weak at “normal” debt levels, median growth rates for countries with public debt over roughly 90 percent of GD? are about one percent lower than other wise: average (mean) growth rates are several percent lower. Surprisingly, the relationship between public debt and…” Link

Tags: , ,

Fiscal adjustments: lessons from recent history

Fiscal adjustments: lessons from recent history. Alberto Alesina, April 2010, Paper. “In the aftermath of the Great Recession, many OECD countries now need to reduce large public sector deficits and debts. This is not the first time that the “world” faces this problem. It happened in an even more dramatic fashion in the past century after the first and second world wars. In the first case, several episodes of large inflation (e.g. France) or hyperinflation (e.g. Austria Germany Hungary) wiped out the debts partly or completely, and in other cases…” Link

Tags: , ,