Austerity Fiscal policies versus Development policies in Italy and European Union The debate on economic policy issues underway in Italy and EU shows two different stances: on one hand a support to restrictive budgetary policy, aimed at achieving the balance of government finance, as required by...

Sovereign risk premia in several euro area countries have risen markedly since 2008, driving up credit spreads in the private sector as well. We propose a New Keynesian model of a two-region monetary union that accounts for this “sovereign risk channel.” The model is calibrated to the euro...

The European Union has recently implemented one of the biggest reform packages in its history. Developed solutions are designed to (1) strengthen EU’s resilience to shocks and (2) improve its shock absorption capabilities. It seems that so far stress was mainly placed on the first objective....

US treasury secretary Mr. Paulson has proposed a bold plan to rescue the world financial system, which involves a taxpayer bailout of over $700 Billion. The Wall Street investment banks are disappearing and unbelievable changes occurring are somewhat similar to the great depression. This short...

The US economy is in the early stages of what looks to be the worst financial and economic crisis since the Great Depression. Starting with the downturn in the housing market and rising foreclosures, the crisis has spread to Fannie and Freddie, the government sponsored enterprises, and to...

There are two schools of thought on causes of financial crises. One views such occurrences as homegrown, a consequence of structural weaknesses of the banking and corporate sector in the countries concerned. The other is of the view that financial crises are brought on by investors' panic...

In September 2007, China established the China Investment Corporation (CIC) as a vehicle to invest its foreign exchange reserves. The CIC reports directly to the State Council, and is led by its Chairman, Lou Jiwei, the former Deputy Secretary-General of the State Council. The CIC's US$200...

High and variable inflation has been a central feature of the Turkish economy since the 1970s. This paper seeks to shed some light on the determinants of inflation in Turkey by analyzing price determination within the framework of a multi-sector macroeconomic model during 1970-95. The main...

Why did the mortgage market melt-down so badly? Why were there so many defaults when the economy was not particularly weak? Why were the securities based upon these mortgages not considered anywhere as risky as they actually turned out to be? It is the thesis of this paper that, in an attempt to...

The successful pursuit of the objective of low inflation by central banks in recent decades has also delivered low variability of both inflation and output. At the same time, numerous financial and other imbalances (defined here as significant and sustained deviations from historical norms) have...