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This paper analyzes the causes and implications of recent financial crises. Financial crises in general lead to changes in both theory and practice of economics. The paper takes an historical overview. The global consensus of economic theory during the 20th century is discussed. The paper...
Persistent link: https://www.econbiz.de/10014180395
The aim of this work is to compare and contrast different ways of modeling financial shocks and financial intermediaries in the Dynamic Stochastic General Equilibrium models (DSGE models) and to discuss the empirical evidence on the importance of modeling financial sector and financial shocks in...
Persistent link: https://www.econbiz.de/10013142856
I use the valuation equation of government debt to understand fiscal and monetary policy in and following the great recession of 2008-2009, to think about whether the US is headed for a fiscal inflation, and what that inflation will look like. I emphasize that a fiscal inflation can come well...
Persistent link: https://www.econbiz.de/10013116066
It is well known fact that all good things, as also bad things, come to an end and business cycles pass through good and bad economic times. Economically 2010 was a year of transition from economic recession to recovery. Economies were improving in some countries and industries were showing...
Persistent link: https://www.econbiz.de/10013110884
This paper examines five possible explanations for the Great Recession of 2008 and 2009, using data for the United States and the eurozone. Of these five hypotheses, four are not supported by the data, while the fifth appears reasonable.
Persistent link: https://www.econbiz.de/10010419411
This paper arms central bank policy makers with ways to think about interactions between financial stability and monetary policy. We frame the issue of whether to integrate financial stability into monetary policy operating rules by appealing to the observation that in actual economies financial...
Persistent link: https://www.econbiz.de/10011294262
We develop a model of gross capital flows and analyze their role in global financial stability. In our model, consistent with the data, when a country experiences asset fire sales, foreign investments exit (fickleness) while domestic investments abroad return home (retrenchment). When countries...
Persistent link: https://www.econbiz.de/10011573237
Conventional Phillips-curve models that are used to estimate the output gap detect a substantial decline in potential output due to the present crisis. Using a multivariate state space model, we show that this result does not hold if the long run role of excess liquidity (that we estimate...
Persistent link: https://www.econbiz.de/10003961061
Countercyclical bank capital requirements have emerged as a popular regulatory tool to help smooth financial cycles. The idea is to reduce capital requirements when exogenous shocks cause aggregate bank capital to decrease so that regulation does not needlessly constrain banks' supply of credit....
Persistent link: https://www.econbiz.de/10014456622
Timothy Geithner's memoir of the financial crisis of 2007-2008 is an important historical document offering details of how policies were formed and implemented during the financial crisis of 2007-2008, showing the political constraints, and offering lessons for future crises. Walter Bagehot's...
Persistent link: https://www.econbiz.de/10013048470