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

Understanding Inflation-Indexed Bond Markets

Understanding Inflation-Indexed Bond Markets. John Campbell, Luis Viceira, May 3, 2009, Paper. “This paper explores the history of inflation-indexed bond markets in the US and the UK. It documents a massive decline in long-term real interest rates from the 1990’s until 2008, followed by a sudden spike in these rates during the financial crisis of 2008. Breakeven inflation rates, calculated from inflation-indexed and nominal government bond yields, stabilized until the fall of 2008, when they showed dramatic declines. The paper asks to what extent short-term real interest rates, bond risks, and liquidity explain the trends before 2008...” Link

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The Aftermath of Financial Crises

The Aftermath of Financial Crises. Carmen M. Reinhart, Kenneth Rogoff, 2009, Paper. “A year ago, we presented a historical analysis comparing the run-up to the 2007 US subprime financial crisis with the antecedents of other banking crises in advanced economies since World War II (Reinhart and Rogoff 2008a). We showed that standard indicators for the United States, such as asset price inflation, rising leverage, large sustained current account deficits, and a slowing trajectory of economic growth, exhibited virtually all the signs of a country on the verge of a financial crisis—indeed, a severe one. In this paper, we engage in a similar comparative historical analysis that is focused on the aftermath of systemic banking crises…Link

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The Economics of Structured Finance

The Economics of Structured Finance. Joshua D. Coval, Erik Stafford, Winter 2009, Paper. “This paper investigates the spectacular rise and fall of structured finance. The essence of structured finance activities is the pooling of economic assets like loans, bonds, and mortgages, and the subsequent issuance of a prioritized capital structure of claims, known as tranches, against these collateral pools. As a result of the prioritization scheme used in structuring claims, many of the manufactured tranches are far safer than the average asset in the underlying pool…” May require purchase or user account. Link

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Banking Crises: An Equal Opportunity Menace

Banking Crises: An Equal Opportunity Menace. Kenneth Rogoff, Carmen Reinhart, December 2008, Paper. “The historical frequency of banking crises is quite similar in high- and middle-to-low-income countries, with quantitative and qualitative parallels in both the run-ups and the aftermath. We establish these regularities using a unique dataset spanning from Denmark’s financial panic during the Napoleonic War to the ongoing global financial crisis sparked by subprime mortgage defaults in the United States. Banking crises dramatically weaken fiscal positions in both groups, with government revenues invariably contracting, and fiscal…” Link

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The Euro and Structural Reforms

The Euro and Structural Reforms. Alberto Alesina, November 2008, Paper. “This paper investigates whether or not the adoption of the Euro has facilitated the introduction of structural reforms, defined as deregulation in the product markets and liberalization and deregulation in the labor markets. After reviewing the theoretical arguments that may link the adoption of the Euro and structural reforms, we investigate the empirical evidence. We find that the adoption of the Euro has been associated with an acceleration of the pace of structural reforms in the product market…” Link

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Crisis Governance in the Administrative State: 9/11 and the Financial Meltdown of 2008

Crisis Governance in the Administrative State: 9/11 and the Financial Meltdown of 2008. Adrian Vermeule, November 1, 2008, Paper. “On September 11, 2001, a massive terrorist attack on the World Trade Center in New York killed over 3,000 Americans. The markets plunged, and airline firms reeled towards bankruptcy. Executive action and legislation followed, both to stabilize the markets and to counter terrorism. One result was seven years of debate about inherent executive power, the nature and quality of emergency lawmaking by Congress, and the risks, benefits and harms of government action…” Link

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WHY IS FISCAL POLICY OFTEN PROCYCLICAL?

WHY IS FISCAL POLICY OFTEN PROCYCLICAL? Alberto Alesina, Filipe R. Campante, September 2008, Paper. “Fiscal policy is procyclical in many developing countries. We explain this policy failure with a political agency problem. Procyclicality is driven by voters who seek to “starve the Leviathan” to reduce political rents. Voters observe the state of the economy but not the rents appropriated by corrupt governments. When they observe a boom, voters optimally demand more public goods or lower taxes, and this induces a procyclical bias in fiscal policy. The empirical evidence is consistent with this explanation…” Link

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Growth Diagnostic: Peru

Growth Diagnostic: Peru, Ricardo Hausmann, September  2008, Paper, This paper presents a growth diagnostic exercise for Peru. It notes that although Peru has recently enjoyed high rates of economic growth, this growth is actually a recovery from a significant and sustained growth collapse that began in the 1970s. Income per capita has barely recovered to its historical peak, despite significant improvements in education, infrastructure, the financial system, political stability, institutional quality, and macroeconomic sustainability. The growth collapse was caused by a decline in export earnings due to the fall in international prices and an inadequate investment regime in export activities that led to a fall in market shareLink

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Final Recommendations of the International Panel on ASGISA

Final Recommendations of the International Panel on ASGISA, Ricardo Hausmann, May 2008, Paper, As part of the Accelerated and Shared Growth Initiative (ASGI-SA), the National Treasury of the Republic of South Africa convened an international panel of economists through Harvard’s Center for International Development. This panel spent two years analyzing the South African economy and its growth prospects, and composed 20 papers spanning all aspects of economic policy. The present paper synthesizes this body of work. We summarize the panel’s assessment of the binding constraints to growth in South Africa and provide specific policy recommendations to help achieve the goal of accelerated and shared growth. Link

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Repayment Frequency and Default in Micro-Finance: Evidence from India

Repayment Frequency and Default in Micro-Finance: Evidence from India, Erica Field, Rohini Pande, January 2008, Paper. “In stark contrast to bank debt contracts, most micro-finance con- tracts require that repayments start nearly immediately after loan disbursement and occur weekly thereafter. Even though economic theory suggests that a more flexible repayment schedule would benefit clients and potentially improve their repayment capacity, micro- finance practitioners argue that the fiscal discipline imposed by frequent repayment is critical to preventing loan default. In this paper we use data from a field experiment which randomized client assignment to a weekly or monthly repayment schedule and find no significant effect of type of repayment schedule on client delinquency or default.” Link

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