This paper provides a set of stylized facts on the mechanisms through which banking and sovereign distress feed into each other, using a large sample of emerging economies over three decades. We first define “twin crises” as events where banking crises and sovereign defaults combine, and...

Interventions by the Federal Reserve during the financial crisis of 2007-2009 were generally viewed as unprecedented and in violation of the rules---notably Bagehot’s rule---that a central bank should follow to avoid the time-inconsistency problem and moral hazard. Reviewing the evidence for...

What is the marginal effect of an increase in the private sector debt-to-GDP ratio on the probability of a banking crisis? This paper shows that the marginal effect of rising debt levels depends on an economy's external position. When the current account is in surplus or in balance, the marginal...

From 1900 to 1935, Argentina evolved from an economy highly dependent on external, primarily British, finance to one more nearly self-sufficient. We examine the failure of domestic finance to adequately fill the void left by the decline of London and the breakdown of the world financial system...

This paper traces the evolution of the Federal Reserve and its engagement with the global economy over the last three decades of the 20th century: 1970 to 2000. The paper examines the Federal Reserve’s role in international economic and financial policy and analysis covering four areas: the...

Remarks before the O'Neil Center for Global Markets and Freedom Conference, SMU Cox School of Business, Dallas, Texas, October 16, 2009. ; This morning, I will argue that a decline in trade flows, at least to some degree, was to be expected during this tumultuous period, the most severe global...

"The problem that has been ailing capital markets and, by extension, the economy has not been the fed funds rate. It has been and remains risk aversion and uncertainty about counterparty risk and capital adequacy." ; Remarks before the Money Marketeers of New York University, New York City,...

"I envision an output path going forward from here that looks something like a check mark, with the Johnny Mercer effect giving us a near-term snapback from the short, intense downstroke, followed by a transition to a long period of slower growth corresponding to the elongated side of the mark."...

Remarks before the Washington Association of Money Managers, Washington, D.C., May 28, 2009. ; "A keen student of the H.4.1 and the Foreign and International Monetary Authority (FIMA) custody holdings reports of the Fed will detect that foreign official holdings of U.S. Treasuries and agencies...

Remarks before the 19th Annual Hyman P. Minsky Conference on the State of the U.S. and World Economies, New York City, April 14, 2010. ; "I think the disagreeable but sound thing to do regarding institutions that are TBTF is to dismantle them over time into institutions that can be prudently...