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Acemoglu, Daron - 2015

This chapter develops a unified framework for the study of how network interactions can function as a mechanism for propagation and amplification of microeconomic shocks. The framework nests various classes of games over networks, models of macroeconomic risk originating from microeconomic...

Persistent link: https://www.econbiz.de/10012457735

Inspecting the Mechanism : Leverage and the Great Recession in the Eurozone

Martin, Philippe - 2014

We provide a comprehensive account of the dynamics of eurozone countries from 2000 to 2012. We analyze private leverage … government spending, and sudden stops. We then ask how eurozone countries would have fared with different policies. We find that …

Persistent link: https://www.econbiz.de/10012458093

Contagion in the European Sovereign Debt Crisis

Glover, Brent - 2014

default. Specifically, we develop an empirical model, based on the recent theoretical literature on contagion in financial …

Persistent link: https://www.econbiz.de/10012458098

Systemic Risk and Stability in Financial Networks

Acemoglu, Daron - 2013

systemic failures due to contagion of counterparty risk. We show that financial contagion exhibits a form of phase transition …

Persistent link: https://www.econbiz.de/10012459934

The Sovereign-Bank Diabolic Loop and ESBies

Brunnermeier, Markus K. - 2016

We propose a simple model of the sovereign-bank diabolic loop, and establish four results. First, the diabolic loop can be avoided by restricting banks domestic sovereign exposures relative to their equity. Second, equity requirements can be lowered if banks only hold senior domestic sovereign...

Persistent link: https://www.econbiz.de/10012456680

Tales from the Bretton Woods

Bordo, Michael D. - 2014

An analogy has been made between the collapse of the Bretton Woods system in 1971 and the recent Eurozone crisis. The …However Bretton Woods is very different from the Eurozone in many dimensions. An even better analogy than BWS is a … Eurozone. In the early 1930s massive gold flows from the interior, hard hit by banking panics, to New York City were similar to …

Persistent link: https://www.econbiz.de/10012458395

Nonlinearities in Sovereign Risk Pricing : The Role of CDS Index Contracts

Delatte, Anne-Laure - 2014

Is the pricing of sovereign risk linear during bearish episodes? Or can initial shocks on economic fundamentals be exacerbated by endogenous factors that create nonlinearities? We test for nonlinearities in the sovereign bond market of European peripheral countries during the debt crisis and...

Persistent link: https://www.econbiz.de/10012458679

Government Debt and Banking Fragility : The Spreading of Strategic Uncertainty

Cooper, Russell - 2013

This paper studies the interaction of government debt and financial markets. Both markets are fragile: excessively responsive to fundamentals and prone to strategic uncertainty. This interaction, termed a 'diabolic loop', is driven by government choice to bail out banks and the resulting...

Persistent link: https://www.econbiz.de/10012459383

Fiscal and Financial Crises

Bordo, Michael D. - 2016

Interconnections between banking crises and fiscal crises have a long history. We document the long-run evolution from classic banking panics towards modern banking crises where financial guarantees are associated with crisis resolution. Recent crises feature a feedback loop between bank...

Persistent link: https://www.econbiz.de/10012456615

The European Crisis in the Context of the History of Previous Financial Crises

Bordo, Michael D. - 2013

There are some striking similarities between the pre 1914 gold standard and EMU today. Both arrangements are based on fixed exchange rates, monetary and fiscal orthodoxy. Each regime gave easy access by financially underdeveloped peripheral countries to capital from the core countries. But the...

Persistent link: https://www.econbiz.de/10012459549

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