Found 114 article(s) for author 'Financial Crisis'

‘It’s crazy for a president to wrap himself in the stock market’

‘It’s crazy for a president to wrap himself in the stock market. Lawrence Summers, November 8, 2017, Audio, “Larry Summers thinks it’s “crazy” that President Donald Trump spends so much time bragging about how great he’s been for the stock market.  The former Treasury secretary and current Harvard professor argues that Trump, who tweets regularly about new stock market records, is setting himself up for a crushing blow if markets tumble.Link

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Four Proposals to Help Commodity Exporters Cope with Price Volatility

Four Proposals to Help Commodity Exporters Cope with Price Volatility. Jeffrey Frankel, October 17, 2017, Paper, “Financial markets have done little, if anything, to moderate the impact of commodity price volatility on the exporting countries. This column reviews four proposals to make exporters less vulnerable to volatility – two attempts at appropriate financial engineering, and two attempts at countercyclical macroeconomic policy. One in each category is tried and tested; the other two have hardly been tried.Link

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Building Emergency Savings Through Employer-Sponsored Rainy Day Savings Accounts

Building Emergency Savings Through Employer-Sponsored Rainy Day Savings Accounts. John Beshears, David Laibson, October 2017, Paper, “Many Americans live paycheck to paycheck, carry revolving credit balances, and have little liquidity to absorb financial shocks (Angeletos et al. 2001; Kaplan and Violante 2014). One consequence of this financial vulnerability is that many individuals use a portion of their retirement savings during their working years. For every $1 that flows into 401(k)s and similar accounts, between 30¢ and 40¢ leaks out before retirement (Argento, Bryant, and Sabelhaus 2015). We explore the practical considerations and challenges of helping households accumulate liquid savings that can be deployed when urgent pre-retirement needs arise. We believe that this can be achieved cost effectively by automatically enrolling workers into an employer-sponsored payroll deduction “rainy day” or “emergency” savings account, and present three specific implementation options.Link

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The Fear Factor in Today’s Interest Rates

The Fear Factor in Today’s Interest Rates. Carmen Reinhart, September 23, 2017, Opinion, “Atlantic-hugging policymakers and pundits, buffered by a continent and a large ocean, may not fully appreciate the significant effect on global financial markets that the threat posed by North Korea has had in recent months. But competition for safe assets has clearly heated up.Link

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Mihir Desai on “The Wisdom of Finance”

Mihir Desai on “The Wisdom of Finance”. Mihir Desai, September 12, 2017, Video, “In 1688, essayist Josef de la Vega described finance as both “the fairest and most deceitful business…the noblest and the most infamous in the world, the finest and most vulgar on earth.” The characterization of finance as deceitful, infamous and vulgar still rings true today – particularly in the wake of the 2008 financial crisis. But, what happened to the fairest noblest, and finest profession that de la Vega saw? De la Vega hit on an essential truth that has been forgotten: finance can be just as principled, life-affirming and worthy as it can be fraught with questionable practices. Today, finance is shrouded in mystery for outsiders, while many insiders are uneasy with the disrepute of their profession. How can finance become more accessible and also recover its nobility?Link

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The Slow Recovery in Output after 2009

The Slow Recovery in Output after 2009. James Stock, 2017, Paper, “The U.S. economy has been expanding slowly since the recession trough in 2009. Though unemployment has declined at about the same rate as in previous recoveries, output has grown much more slowly than in the past. We explore explanations for the shortfall in output growth, using a quantitative decomposition based on growth economics. Two components of the decomposition stand out: slow growth in productivity, and a growing shortfall of labor-force participation relative to its demographic determinants. The slow growth in both components predated the recession. Our analysis gives a full treatment to cyclical effects.Link

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Odiousness Ratings for Public Debt

Odiousness Ratings for Public Debt. Ricardo Hausmann, August 30, 2017, Opinion, “Well-functioning markets should have shut down the Venezuelan regime’s access to finance long before US President Donald Trump did. The fact that they didn’t not only shocked the moral sentiments of many, but also revealed a fundamental defect in sovereign debt markets’ institutional architecture.Link

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The Fed’s Next Big Set of Challenges

The Fed’s Next Big Set of Challenges. Lawrence Summers, August 25, 2017, Opinion, “I will not be attending Jackson Hole this year but I will be thinking about some of the issues under discussion. As I have written recently, I think the period going forward will be more challenging for central banks than the preceding few years. I will sleep best at night if Janet Yellen is reappointed.Link

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Dealing with Monetary Paralysis at the Zero Bound

Dealing with Monetary Paralysis at the Zero Bound. Kenneth Rogoff, Summer 2017, Paper, “Recently, the key constraint for central banks is the zero lower bound on nominal interest rates. Central banks fear that if they push short-term policy interest rates too deeply negative, there will be a massive flight into paper currency. This paper asks whether, in a world where paper currency is becoming increasingly vestigial outside small transactions (at least in the legal, tax compliant economy), there might be relatively simple ways to finesse the zero bound without affecting how most ordinary people live. Surprisingly, this question gets little attention compared to the massive number of articles that take the zero bound as given and look for out-of-the-box solutions for dealing with it. In an inversion of the old joke, it is a bit as if the economics literature has insisted on positing ‘assume we don’t have a can opener,’ without considering the possibility that we might be able to devise one. It makes sense not to wait until the next financial crisis to develop plans.Link

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Recovery is Not Resolution

Recovery is Not Resolution. Carmen Reinhart, August 1, 2017, Opinion, “Earlier this year, the consensus view among economists was that the United States would outstrip its advanced-economy rivals. The expected US growth spurt would be driven by the economic stimulus package described in President Donald Trump’s election campaign. But the most notable positive economic news of 2017 among the developed countries has been coming from Europe.Link

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