Found 508 article(s) in category 'Q4: Financial Crisis?'

HOW DO WE PREVENT THE NEXT FINANCIAL CRISIS?

The posts collected here explore the causes of the global financial crisis and its short- and long-term consequences. They include a multitude of proposals for preventing and mitigating financial crises in the future.

Harvard’s Reinhart Says Economy in ‘Sweet Spot,’ Rates Have ‘Rock Bottom Feel’

Harvard’s Reinhart Says Economy in ‘Sweet Spot,’ Rates Have ‘Rock Bottom Feel’. Carmen Reinhart, January 22, 2020, Video, “Harvard Kennedy School Professor Carmen Reinhart discusses the current state of the U.S. economy and Federal Reserve monetary policy. She talks with Bloomberg’s Tom Keene and Jonathan Ferro at the World Economic Forum’s annual meeting in Davos, Switzerland on “Bloomberg Surveillance.”Link

 

 

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Lebanon’s Perfect Storm

Lebanon’s Perfect Storm. Ishac Diwan, January 9, 2020, Opinion, “After years of maintaining a dysfunctional political economy based on sectarianism and rentierism, Lebanon’s ruling elites are being confronted with simultaneous financial, economic, and political crises. The question now is how they respond to a reformist movement demanding fundamental change, including a new political settlement.Link

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Public borrowing is cheap but ramping up debt is not without risk

Public borrowing is cheap but ramping up debt is not without risk. Kenneth Rogoff, December 9, 2019, Opinion, “With interest rates on government debt at multi-decade lows, a number of leading economists have argued that almost every advanced economy can allow debt to drift up towards Japanese levels (over 150% of GDP even by the most conservative measure) without any great concern about long-term consequences. Advocates of much higher debt might be right, but they tend to downplay or ignore everything that can go wrong.Link

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Compensation, Austerity, and Populism

Compensation, Austerity, and Populism. Jeffry Frieden, December 6, 2019, Paper, “The existence of comprehensive social policies to compensate those who might be harmed by integration is widely seen as an important precondition for public support for economic and political integration in western Europe. However, many western European countries reduced spending on income maintenance after 1990. In countries hard hit by the sovereign debt crisis, there have also been significant cuts to social services. We evaluate the impact of levels of social spending on public support for populist parties. We also evaluate the impact of austerity measures on support for such parties. We examine a panel of 187 elections from 1990-2017 and analyze pooled cross-sectional data from eight waves of the European Social Survey. We find evidence that populist parties fare worse where countries spend more on social support, and where spending has not been reduced from historical levels. On the other hand, where countries spend less on income maintenance, and/or have decreased spending from earlier levels, populist vote shares are consistently higher, and the likelihood of supporting populist parties greater. This relationship holds when controlling for a range of individual and macroeconomic factors, including occupational and educational characteristics, unemployment, economic growth, and immigration rates. The growing strength of populist political parties is rooted in long-term economic and cultural changes, but appropriate social policies may moderate their appeal.Link

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The Economic Context for Reforming the Safety Net

The Economic Context for Reforming the Safety Net. Karen Dynan, November 6, 2019, Paper, “As we wrestle with the future of our safety net and social insurance programs, it is important to understand not only the features and outcomes associated with individual programs but also the broader economic context. This reflection piece discusses several relevant aspects of the macroeconomy and of economic and financial conditions facing households: rising government debt, slower macroeconomic growth, limited tools to fight future recessions, greater income inequality, and the financial struggles of households. It goes on to draw lessons for how we should reform our system of entitlement programs.Link

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Undisclosed Debt Sustainability

Undisclosed Debt Sustainability. Laura Alfaro, 2019, Paper, “Over the past decade, non–Paris Club creditors, notably China, have become an important source of financing for low- and middle-income countries. In contrast with typical sovereign debt, these lending arrangements are not public, and other creditors have no information about their magnitude. We transform the traditional sovereign debt and default model to quantitatively study incomplete information arrangements and find they greatly reduce traditional/Paris Club creditors’ debt sustainability. Disclosure of nontraditional debt would imply significant welfare gains for the recipient countries but would reduce its sustainability. We discuss the implications of nontraditional lending on standard assumptions of sovereign debt models.Link

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The American Working Man Still Isn’t Working

The American Working Man Still Isn’t Working. Jason Furman, September 19, 2019, Opinion, “The United States is in the midst of its longest-ever economic recovery. It has been a slow climb out of the depths of the 2008–9 financial crisis, but the upward trend is now in its 11th year. American workers have seen 107 consecutive months of job growth, more than double the previous record, and the unemployment rate will soon reach its lowest level in over 50 years. However, there is one important economic indicator that still hasn’t rebounded to pre-crisis levels: the employment rate among prime-age men—that is, men between the ages of 25 and 54.Link

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