Found 3 article(s) for author 'Financial Stability'

Social Risk, Fiscal Risk, and the Portfolio of Government Program

Social Risk, Fiscal Risk, and the Portfolio of Government Program. Samuel Hanson, David Scharfstein, Adi Sunderam, June 2018, Paper, “We develop a model of government portfolio choice in which a benevolent government chooses the scale of risky projects in the presence of market failures and tax distortions. These two frictions generate motives to manage social risk and scale risk. Social risk management makes attractive programs that ameliorate market failures in bad economic times. Fiscal risk management makes unattractive programs that entail large government outlays at times when other programs in the governments portfolio also require large outlays. We characterize the determinants of social and scale risk and argue that these two risk management motives often conflict. Using the model, we explore how the attractiveness of different financial stability programs varies with the governments scale burden and with characteristics of the economy.Link

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Credit-Market Sentiment and the Business Cycle

Credit-Market Sentiment and the Business Cycle. Jeremy Stein, April 20, 2015, Paper. “Using U.S. data from 1929 to 2013, we show that elevated credit-market sentiment in year t–2 is associated with a decline in economic activity in years t through t+2. Underlying this result is the existence of predictable mean reversion in credit-market conditions. That is, when our sentiment proxies indicate that credit risk is aggressively priced, this tends to be followed by a subsequent widening of credit spreads, and the timing of this widening is, in turn, closely tied to the onset of a contraction in economic activity…Link

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Financial Structures and Economic Outcomes: An Empirical Analysis

Financial Structures and Economic Outcomes: An Empirical Analysis. Tom Gole, May 2013, Paper. “This paper investigates the potential relationships between financial structures and economic outcomes. The empirical results that withstand a battery of methods suggest that some financial intermediation structures are likely to be more closely related to positive economic outcomes than others. For instance, protective financial buffers within institutions have been associated with better economic performance, and a domestic financial system that is dominated by some types of nontraditional bank intermediation…” Link verified March 28, 2014

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