on cross border bank credit and the u s financial crisis transmission to equity markets this paper examines the role played by cross border equity bond and bank credit flows versus international trade in the transmission of the u s financial crisis to equity markets worldwide we estimate vector autoregressive models with exogenous global factors using monthly data on 36 emerging and developed countries the results from an eclectic methodology that includes causality tests generalized impulse responses and forecast error variance decompositions indicate that the crisis is mostly transmitted through bank credit rather than portfolio flows and international trade the results are robust to altering the exogenous versus endogenous vectors of variables to measuring equity prices in u s dollars or local currency to averaging the data across countries versus averaging the parameters from individual country estimation and to redefining the start date of the crisis the findings endorse the use of banking regulation and capital controls as part of the policy toolkit to limit financial vulnerability

macroprudential policies capital flows and the structure of the banking sector abstract using a large sample of advanced and emerging market economies over the period 1999 2012 we examine the effectiveness of macroprudential policies mpps in managing cross border bank flows conditioning on the structure of the banking sector in the mpp implementing country we find that higher regulatory quality and a higher credit to deposit ratio increase the effectiveness of mpps while a higher cost to income ratio has the opposite effect if all three financial variables are evaluated at the median the marginal effect of our preferred mpp measure leads to a reduction of international bank inflows in percent of gdp by around half a percentage point and is only marginally significant however when the more enhanced 25th 10th percentiles of their respective distributions are considered we observe as a response to the same mpp measure a reduction of bank inflows by 3 44 5 39 percentage points that is highly statistically and economically significant additionally we find that the structure of the domestic banking sector determines spillovers from mpps across asset classes while spillovers from mpps across countries are a function of banking sector conditions both at home and abroad

heterogeneous effects of competitiveness shocks on macroeconomic performance across euro area countries this paper considers how competitiveness impacts macroeconomic performance in 11 euro area countries var models are estimated for the individual countries using quarterly data from 1995q4 to 2013q4 besides unit labour costs as a competitiveness measure the models include gdp the current account balance and domestic credit the empirical analyses show that changes in unit labour costs help explain gdp dynamics in the short and medium term in most countries whereas they have little explanatory power for the current account balance or domestic credit for most countries overall the effects of the unit labour costs vary substantially across the countries in the euro area the heterogeneity suggests that policy measures aiming to improve economic growth correct current account imbalances and ensure financial stability need to take country specific features into account

the mix of international banks foreign claims determinants and implications we analyze the cross country determinants and financial stability implications of the mix of international banks foreign claims we distinguish between local claims extended by host country affiliates and cross border claims booked outside the receiving country using data on italian spanish and us banks foreign claims we find that the share of local claims is driven by restrictions on banking sector openness and by local scale economies business opportunities the impact of limits on property rights entry requirements start up and informational costs is less robust finally foreign claim volatility is lower in countries with a larger share of local claims

drivers of cross border banking exposures during the crisis abstract the recent crisis highlighted the role of cross border banking linkages this paper analyzes these linkages through an examination of both banking systems foreign credit exposures and borrower countries reliance on foreign bank credit it does this by combining bis data with bank level data the results indicate that the proposed refinements on measuring those two exposures are important especially when foreign bank affiliates funding relies heavily on local deposits after developing novel and necessary break in series and exchange rate variation adjustments estimations looking at the driving factors of both measures during 2006 2012 highlight i the role of systemic banking crises and global financial conditions in the evolution of banks foreign credit exposures ii the role of a larger set of factors in the case of the evolution of borrower countries reliance on foreign bank credit how countries borrowed from whom they borrowed and global financial and domestic demand conditions

contagion and banking crisis international evidence for 2007 2009 abstract policy makers aim to avoid banking crises and although they can to some extent control domestic conditions internationally transmitted crises are difficult to tackle this paper identifies international contagion in banking during the 2007 2009 crisis for 54 economies we identify three channels of contagion systematic idiosyncratic and volatility and find evidence for these in 45 countries banking crises are overwhelmingly associated with the presence of both systematic and idiosyncratic contagion the results reveal that crisis shocks transmitted from a foreign jurisdiction via idiosyncratic contagion increase the likelihood of a systemic crisis in the domestic banking system by almost 37 percent whereas increased exposure via systematic contagion does not necessarily destabilize the domestic banking system thus while policy makers and regulatory authorities are rightly concerned with the systematic transmission of banking crises reducing the potential for idiosyncratic contagion can importantly reduce the consequences for the domestic economy

can leading indicators assess country vulnerability evidence from the 2008 09 global financial crisis abstract we investigate whether leading indicators can help explain the cross country incidence of the 2008 09 financial crisis rather than looking for indicators with specific relevance to the recent crisis the selection of variables is driven by an extensive review of more than eighty papers from the previous literature on early warning indicators our motivation is to address suspicions that indicators found to be useful predictors in one round of crises are typically not useful to predict the next round the review suggests that central bank reserves and past movements in the real exchange rate were the two leading indicators that had proven the most useful in explaining crisis incidence across different countries and episodes in the past for the 2008 09 crisis we use six different variables to measure crisis incidence drops in gdp and industrial production currency depreciation stock market performance reserve losses and participation in an imf program we find that the level of reserves in 2007 appears as a consistent and statistically significant leading indicator of who got hit by the 2008 09 crisis in line with the conclusions of the pre 2008 literature in addition to reserves recent real appreciation is a statistically significant predictor of devaluation and of a measure of exchange market pressure during the current crisis we define the period of the global financial shock as running from late 2008 to early 2009 which probably explains why we find stronger results than earlier papers such as obstfeld et al 2009 2010 and rose and spiegel 2009a b 2010 2011 which use annual data

post mortem examination of the international financial network abstract as the recent crisis has forcefully suggested understanding financial market interconnectedness is of a paramount importance to explain systemic risk stability and economic dynamics in this paper we address these issues along two related perspectives first we explore the statistical properties of the international financial network ifn defined as a weighted directed graph where nodes are countries and links represent debtor creditor relationships in equities and short long run debt we investigate whether the 2008 financial crisis has resulted in a significant change in the topological properties of the ifn our findings suggest that the crisis caused not only a reduction in the amount of securities traded but also induced changes in the topology of the network and in the time evolution of its statistical properties this has happened however without changing the disassortative core periphery structure of the ifn architecture second we perform an econometric study to examine the ability of network based measures to explain cross country differences in crisis intensity we investigate whether the conclusion of previous studies showing that international connectedness is not a relevant predictor of crisis intensity may be reversed once one explicitly accounts for the position of each country within the ifn we show that higher interconnectedness reduces the severity of the crisis as it allows adverse shocks to dissipate quicker however being central in the network may make countries that are not members of a rich club more vulnerable in times of crisis finally we find strong evidence of nonlinear effects once the high degree of heterogeneity that characterizes the ifn is taken into account

controlling for the use of extreme weights in bank efficiency assessments during the financial crisis we propose a method for bank efficiency assessment based on weight restricted dea that limits banks abilities to use extreme weights corresponding to extreme judgements of the risk adjusted prices on funding sources and assets based on a data set comprising the largest european banks during the financial crisis we illustrate the impact of the proposed weight restrictions in two different efficiency models one related to banks funding mix and one related to their asset mix the results show that using a more balanced set of weights tend to reduce the estimated efficiency scores more for those banks which were bailed out during the crisis which confirms the potential bias within standard dea that does not control for extreme weights applied by highly risky banks we discuss the use of the proposed method as a regulatory tool to constrain discretion when complying with regulatory capital benchmarks such as the basel regulatory capital ratios

family firm performance over the business cycle a meta analysis the financial performance of family firms has been widely studied in the literature combining the results of 155 primary studies from 35 countries with data about business cycles we investigate how family firm performance changes over the business cycle using meta analytic estimation methods we find that family firms outperform nonfamily firms in developed markets irrespective of economic circumstances this outperformance although statistically significant is very small and practically negligible with regard to the business cycle we find evidence for a procyclical effect in which the relative performance of family firms is lower in economically difficult times our study extends the literature on how family firm performance depends on macroeconomic factors

what happens during recessions crunches and busts we provide a comprehensive empirical characterization of the linkages between key macroeconomic and financial variables around business and financial cycles for 21 oecd countries over the period 1960 2007 in particular we analyse the implications of 122 recessions 113 28 credit contraction crunch episodes 114 28 episodes of house price declines busts 245 61 episodes of equity price declines busts and their various overlaps in these countries over the sample period our results indicate that the interactions between macroeconomic and financial variables can play a major role in determining the severity and duration of a recession specifically we find evidence that recessions associated with credit crunches and house price busts tend to be deeper and longer than other recessions stijn claessens m ayhan kose and marco e terrones

from great depression to great credit crisis similarities differences and lessons the great depression of the 1930s and the great credit crisis of the 2000s had similar causes but elicited strikingly different policy responses while it remains too early to assess the effectiveness of current policy it is possible to analyse monetary and fiscal responses in the 1930s as a natural experiment or counterfactual capable of shedding light on the impact of current policies we employ vector autoregressions instrumental variables and qualitative evidence for 27 countries in the period 1925 39 the results suggest that monetary and fiscal stimulus was effective that where it did not make a difference it was not tried they shed light on the debate over fiscal multipliers in episodes of financial crisis they are consistent with multipliers at the higher end of those estimated in the recent literature and with the argument that the impact of fiscal stimulus will be greater when banking systems are dysfunctional and monetary policy is constrained by the zero bound miguel almunia agustin benetrix barry eichengreen kevin h o rourke and gisela rua

inflation and optimal price adjustment under monopolistic competition this paper considers a model of a monopolistically competitive industry with a large number of firms producing imperfect substitutes there is an exogenous inflation rate and each firm must pay a fixed cost every time it adjusts its nominal price it is shown that under quite general conditions there exists a continuum of periodic and synchronized equilibria each one associated with a different frequency of price adjustment consequently the same frequency of price adjustment is compatible with a full range of inflation rates copyright 1992 by the london school of economics and political science

the evolving value of foreign partnerships in transitioning economies through studying joint ventures during the early 1993 and late phases 2001 of hungary s economic transition to market economy we demonstrate how institutional and economic transformation alter

does inequality lead to credit growth testing the rajan hypothesis using state level data this paper uses state level data to test the rajan hypothesis from his book fault lines that an increase in inequality can lead to a credit boom using dynamic heterogeneous panel estimation methods i e mg pmg dfe we find a significant positive long run relationship between inequality and real estate lending across u s states

financialisation oil and the great recession abstract this article addresses the role of world oil price hike of 2007 08 in serving to transform the financial and banking crisis into what is commonly referred to the great recession existing literature on the global crisis of 2007 09 tends to view it as a financial or banking phenomenon with analyses focusing mainly on state policies governance mechanisms and market dynamics in transforming the banking crisis of 2007 08 into the economic recession of 2008 12 13 although often attributing the global meltdown to wider phenomenon of financialisation rarely do existing perspectives delve into the role of the commodity sector in the global credit crunch in this paper we aim to fill this gap by inquiring into the role played by oil as a financial asset class in the political economy of the global crisis

lessons from the 1930s great depression this paper provides a survey of the great depression comprising both a narrative account and a detailed review of the empirical evidence focusing especially on the experience of the united states we examine the reasons for and flawed resolution of the american banking crisis as well as the conduct of fiscal and monetary policy we also consider the pivotal role of the gold standard in the international transmission of the slump and leaving gold as a route to recovery policy lessons for today from the great depression are discussed as are some implications for macroeconomics

international shock transmission after the lehman brothers collapse evidence from syndicated lending after lehman brothers filed for bankruptcy in september 2008 cross border bank lending contracted sharply to explain the severity and variation in this contraction we analyze detailed data on cross border syndicated lending by 75 banks to 59 countries we find that banks that had to write down sub prime assets refinance large amounts of long term debt and experienced sharp declines in their market to book ratio transmitted these shocks across borders by curtailing their lending abroad while shocked banks differentiated between countries in much the same way as less constrained banks they restricted their lending more to small borrowers

on crises contagion and confusion abstract since the tequila crisis of 1994 1995 the asian flu of 1997 and the russian virus of 1998 economists have been busy producing research on the subject of contagion yet few studies have examined empirically through which channels the disturbances are transmitted if there are indeed fundamental reasons for the spillovers we observe we attempt to fill this gap by analyzing how both trade links and the largely ignored financial sector links influence the pattern of fundamentals based contagion we examine the role of international bank lending the potential for cross market hedging and bilateral and third party trade in the propagation of crises

wealth culture and corruption this paper examines the impact of national wealth income distribution government size and four cultural variables on the perceived level of corruption in a country the study finds that corruption is significantly correlated to gnp per capita power distance masculinity and uncertainty avoidance significant interaction effects occur in collectivistic and high power distance countries suggestions for future research are developed

is the 2007 u s sub prime financial crisis so different an international historical comparison the first major financial crisis of the twentyfirst century involves esoteric instruments unaware regulators and skittish investors it also follows a well trodden path laid down by centuries of financial folly is the special prob lem of sub prime mortgages really different our examination of the longer historical record which is part of a larger effort on cur rency and debt crises finds stunning qualitative and quantitative parallels across a number of standard financial crisis indicators to name a few the run up in us equity and housing prices that graciela l kaminsky and reinhart 1999 find to be the best leading indicators of crisis in countries experiencing large capital inflows closely tracks the average of the previous 18 post world war ii banking crises in industrial countries so too does the inverted v shape of real growth in the years prior to the crisis despite widespread concern about the effects on national debt of the tax cuts of the early 2000s the run up in us public debt is actually some what below the average of other crisis episodes in contrast the pattern of us current account deficits is markedly worse at this juncture the book is still open on how the current dislocations in the united states will play out the precedent found in the aftermath of other episodes suggests that the strains can be quite severe depending especially on the initial degree of trauma to the financial system and to some extent the policy response the average drop in real per capita output growth is over 2 percent and it typically takes two years to return to trend for the five most catastrophic cases which include episodes in finland japan

liquidity management of u s global banks internal capital markets in the great recession abstract the recent crisis highlighted the importance of globally active banks in linking markets one channel for this linkage is through how these banks manage liquidity across their entire banking organization we document that funds regularly flow between parent banks and their affiliates in diverse foreign markets we show that parent banks when hit by a funding shock reallocate liquidity in the organization according to a locational pecking order affiliate locations that are important for the parent bank revenue streams are relatively protected from liquidity reallocations in the organization while traditional funding locations are more extensively used to buffer shocks to the parent bank balance sheets

non core bank liabilities and financial vulnerability a lending boom is reflected in the composition of bank liabilities when traditional retail deposits core liabilities cannot keep pace with asset growth and banks turn to other funding sources non core liabilities to finance their lending we formulate a model of credit supply as the flip side of a credit risk model where a large stock of non core liabilities serves as an indicator of the erosion of risk premiums and hence of vulnerability to a crisis we find supporting empirical evidence in a panel probit study of emerging and developing economies

credit cycle coherence in the eurozone was there a euro effect this paper examines effects of the euro introduction on credit cycle coherence in the eurozone through six channels we construct and describe credit cycles for total bank credit household mortgages and non financial business loans for 16 emu economies over 1990 2015 credit cycle coherence is measured by synchronicity of cycle movements and similarity of their amplitudes we find that the effect of euro introduction runs through elimination of currency risk and higher capital flows which decrease coherence of total credit and mortgage credit cycles but increase coherence of business credit cycles falling interest rates contribute to the convergence of total and mortgage credit cycles financial deregulation and legal harmonization are associated with lower coherence of all credit cycles while trade openness has the opposite impact the findings impinge on monetary policy effectiveness in the eurozone with implications for macroprudential policy

fluidity of regulation csr nexus the multinational corporate corruption example corporate social responsibility csr is a relatively undeveloped concept despite its increasing importance to corporations one difficulty is the possible inexactness of csr another is the apparent reluctance by regulatory authorities and policy makers to intervene in the area this is largely a result of inhibitions created by traditional approaches to company law with emphasis on shareholder protection and financial disclosure the consequence is the stultification of independent development of csr by tying social issues to financial performance this attitude might not be unconnected to the theoretical and practical challenges in justifying csr and defining its scope the underlying impediment is a factual and theoretical failure to distinguish instrumental and pure ethical csr this article demonstrates that ethical csr highlights the role of regulation and a principal stance is that regulation is neither incompatible nor irreconcilable with ethical csr the article argues that cognizance of the intrinsic moral justification of pure csr is required for delineating the scope of csr as well as for clarifying the desirability and extent of its regulation it argues that the dynamic history and visage of multinational corporate corruption illuminates the fluidity of the regulation csr relationship the current and widening backlash against transnational corporate corruption is arguably a demonstration of the position that regulation and csr are not mutually exclusive and absolute concepts this article submits that recognition and application of this ethical and instrumental csr distinction is fundamental to the development of csr and resolution of connected questions of regulation

do capital flows change domestic credit allocation since the 1990s domestic bank credit has been reallocated away from lending to non financial business and toward households an expanding literature discusses negative effects on growth and stability of this change in credit allocation we research its drivers we hypothesize that if foreign capital flows into economies with few investment opportunities it may substitute for domestic bank lending to non financial business so that bank balance sheets become more dominated by household lending in gmm estimations on data for 36 economies over 1990 2011 we find evidence consistent with this mechanism foreign capital inflows into the non bank sector but not into the bank sector are associated with lower shares of business lending in domestic bank portfolios the association is weaker in economies with more investment opportunities whether proxied by investment shares current account surpluses or emu membership our results highlight the importance of sectoral destination in determining the effects of capital flows

looking for a needle in a haystack revisiting the cross country causes of the 2008 9 crisis by bayesian model averaging in this paper we explore the cross country variation in the output impact of the global financial crisis in 2008 9 we use the extensive dataset of rose and spiegel but control for the problems of model uncertainty and outliers by using a variety of bayesian model averaging techniques we find first that cross country differences in crisis intensity can be explained by macroeconomic vulnerabilities second ignoring model uncertainty can lead to incorrect inferences third international trade linkages do matter

cross country experiences and policy implications from the global financial crisis the financial crisis of 2007 2008 is rooted in a number of factors some common to previous financial crises others new analysis of post crisis macroeconomic and financial sector performance for 58 advanced countries and emerging markets shows a differential impact of old and new factors factors common to other crises like asset price bubbles and current account deficits help to explain cross country differences in the severity of real economic impacts new factors such as increased financial integration and dependence on wholesale funding help to account for the amplification and global spread of the financial crisis our findings point to vulnerabilities to be monitored and areas of needed national and international reforms to reduce risk of future crises and cross border spillovers they also reinforce a sad state of knowledge much of how crises start and spread remains unknown stijn claessens giovanni dell ariccia deniz igan and luc laeven

contagion and trade why are currency crises regional abstract currency crises tend to be regional they affect countries in geographic proximity this suggests that patterns of international trade are important in understanding how currency crises spread above and beyond any macroeconomic phenomena we provide empirical support for this hypothesis using data for five different currency crises in 1971 1973 1992 1994 and 1997 we show that currency crises affect clusters of countries tied together by international trade by way of contrast macroeconomic and financial influences are not closely associated with the cross country incidence of speculative attacks

globalization of corporate risk taking we explore how the interconnected nature of global finance affects corporate risk taking we show that a common global factor known to be associated with fluctuations in cross border banking is also strongly associated with common co movements in corporate risk taking across a diverse universe of international firms our study contributes to the international business literature as the first comprehensive investigation of how global financial conditions induce greater synchronization of risk taking across regions and sectors

global deleveraging and foreign banks lending to latin american countries proquest denotes formulae omitted lending by foreign banks to emerging markets is a defining feature of finan cial globalization in the years preceding the recent global crisis foreign bank lending to emerging economies expanded rapidly whether directly from parent banks headquarters in advanced economies cross border flows or through their affiliates operating in host countries in the case of latin america lending by foreign banks became a significant source of funding for households and firms over the last decade although there is no consensus on the benefits of foreign banks activity on balance the presence of foreign owned banks is generally believed to have enhanced competition and aided overall financial stability 1after the onset of the global credit crunch in 2008 09 however foreign banks became a potential conduit through which financial stress in advanced economies could spread to emerging markets funding shortages in interbank markets and the need to deleverage bank balance sheets raised concerns that for eign banks would pull back from international lending activities potentially dis rupting macroeconomic and financial stability in emerging market economies 2in latin america the growth rate of total foreign banks credit slowed sig nificantly after the collapse of lehman brothers in the third quarter of 2008 yet crucially the lending behavior of parent banks vis a vis their local affili ates in latin american economies was starkly different cross border lend ing which is mostly denominated in foreign currencies followed a boom bust pattern reversing sharply after the fourth quarter of 2008 in contrast lending by their affiliates operating locally a large share of which is denominated in host countries domestic currencies proved much more resilient and contin ued to expand even amid the financial turmoil this paper explores how the global financial shocks were transmitted to latin american countries through the foreign bank lending channel for this purpose we undertake an econometric analysis of the determinants of foreign banks lending to latin american and caribbean countries using data from the bank for international settlements bis the sample covers twelve latin american countries and spans 1999 the first year for which data are available on a quarterly basis to the first quarter of 2009 at the height of the global credit crunch we assess the effects of three factors that characterized the recent global financial turmoil the freezing of international money markets the deterioration of the financial health of parent banks in advanced economies and more restrictive lending standards in developed countries banking sys tems the sample period used in the paper thus provides an event study of the transmission of the global crisis to foreign banks lending rather than a systematic description of foreign banks reaction to crises to identify the channels of transmission and the possible mitigating fac tors we exploit differences in the geographic structure cross border versus local affiliates and currency mix foreign versus domestic of foreign banks lending to latin american countries at the bilateral level that is between each latin american recipient country and a bis reporting creditor country in a given quarter for this purpose we rely on publicly available data from the bis on the currency structure of foreign banks claims together with confidential bis data on the share of foreign banks total lending extended through local affiliates in both domestic and foreign currencies our results indicate that international money market conditions had a sig nificant impact on foreign banks lending to latin american and caribbean countries in particular an increase in the ted spread caused by liquidity shortages in the global interbank market adversely affects foreign banks lending growth to latin american countries

emerging technologies and ethics a race to the bottom or the top does national success with an emerging technology require ethical sacrifices this question is considered through the simultaneous consideration of ethics investment and outcomes in the nine jurisdictions that are making the largest investments in nanotechnologies an important emerging technology it is found that while ethical environment has no notable effect on pure and applied research a more positive ethical environment is associated with measures associated with invention and commercialization in summary a race to the top supports invention and commercialization of emerging technologies a critical finding as it suggests that issues such as corruption and regulation could be critical in limiting the extraction of social and economic benefit from emerging technologies like nanotechnologies

are corruption indices a self fulfilling prophecy a social labeling perspective of corruption rankings of countries by perceived corruption have emerged over the past decade as leading indicators of governance and development designed to highlight countries that are known to be corrupt their objective is to encourage transparency and good governance high rankings on corruption it is argued will serve as a strong incentive for reform the practice of ranking and labeling countries corrupt however may have a perverse effect consistent with social labeling theory we argue that perceptual indices can encourage the loss of needed investment and thus contribute to higher rates of corruption within unfavorably ranked countries in effect corruption indices may inhibit foreign direct investment the effect of which is to encourage the status quo in terms of corruption ranking using an experimental study design we test the effects of country corruption rankings on the assessment of country investment desirability and find ranking exposure causes shifts in country investment desirability for 10 of 12 countries studied these findings suggest that corruption rankings which are based on perceptions of corruption may cause country isolation and a reduction in legitimate means of investment

a crude shock explaining the short run impact of the 2014 16 oil price decline across exporters abstract the sharp long lasting decline in oil prices in 2014 16 tested the resilience of oil exporters we examine the degree to which economic fundamentals entering the oil price decline explain the impact on economic growth across oil exporting economies and derive policy implications as to what factors help to mitigate the negative effects we find that pre existing fundamentals account for about half of the cross country variation in the impact of the shock oil exporters that weathered the shock better tended to have a stronger fiscal position higher foreign currency liquidity buffers a more diversified export base a history of price stability and a more flexible exchange rate regime within this group of countries the impact of the shock is not found to be related to the size of oil exports or the share of oil in fiscal revenue or economic activity

multinational banks and the global financial crisis weathering the perfect storm we use data on the 48 largest multinational banking groups to compare the lending of their 199 foreign subsidiaries during the great recession with lending by a benchmark group of 202 domestic banks contrary to earlier more contained crises parent banks were not a significant source of strength to their subsidiaries during the 2008 09 crisis as a result multinational bank subsidiaries had to slow down credit growth about twice as fast as domestic banks this was particularly the case for subsidiaries of banking groups that relied more on wholesale market funding domestic banks were better equipped to continue lending because of their greater use of deposits a relatively stable funding source during the crisis we conclude that while multinational banks may contribute to financial stability during local bouts of financial turmoil they also increase the risk of importing instability from abroad

cross country causes and consequences of the crisis an update abstract we update rose and spiegel forthcoming rose and spiegel 2010 and search for simple quantitative models of macroeconomic and financial indicators of the great recession of 2008 09 we use a cross country approach and examine a number of potential causes that have been found to be successful indicators of crisis intensity by other scholars we check a number of different indicators of crisis intensity and a variety of different country samples while countries with higher income and looser credit market regulation seemed to suffer worse crises we find few clear reliable indicators in the pre crisis data of the incidence of the great recession countries with current account surpluses seemed better insulated from slowdowns

how resilient and countercyclical were emerging economies to the global financial crisis during the crises of the 1990s emerging economies usually lacked the policy tools to deal with external shocks that were available to advanced economies worldwide turbulent episodes found most emerging economies unable to perform countercyclical policies and in many cases their own vulnerabilities and poor institutional frameworks amplified negative external shocks leading to sharper recessions this paper shows that the 2008 2009 global financial crisis represents a structural break in the way emerging economies conduct their policies with more countercyclical policies pursued before and during the global crisis moreover breaking with the past emerging economies did not fall more than developed economies during the global financial crisis thus becoming more similar to developed economies the resilience of emerging economies during the 2008 2009 crisis might be partly attributed to a combination of sounder macroeconomic and financial policy frameworks with a shift towards safer domestic and international financial stances

foreign bank behavior during financial crises one of the persistent policy problems faced by governments contemplating financial liberalizations is the question of whether to allow foreign banks entry into the domestic economy this question has become ever more urgent in recent times due to rapid financial globalization coupled with the credit contractions experienced as a result of the 2007 08 financial crisis this paper examines the question of whether opening the financial sector to foreign participation is a good idea for developing countries using a unique bank level database of foreign ownership in particular the authors examine whether the credit supply of majority foreign owned financial institutions differ systematically conditional on a crisis event in their home economies they show that foreign banks that were exposed to crises in their home countries exhibit changes in lending patterns that are lower by between 13 and 42 percent than their non crisis counterparts

market concentration and the likelihood of financial crises abstract according to theory market concentration affects the likelihood of a financial crisis in different ways the concentration stability and the concentration fragility hypotheses suggest opposing effects operating through specific channels using data of 160 countries for the period 1970 2009 this paper empirically tests these indirect effects of financial market structure we set up a simultaneous system in order to jointly estimate financial stability and the relevant channel variables as endogenous variables our findings provide support for the assumption of channel effects in general and both the concentration stability and the concentration fragility hypothesis in particular the effects are found to vary between high and low income countries

international validation of the corruption perceptions index implications for business ethics and entrepreneurship education international government and corporate corruption is increasingly under siege although various groups of researchers have quantified and documented world wide corruption apparently no one has validated the measures this study finds a very strong significant correlation of three measures of corruption with each other thereby indicating validity one measure was of black market activity another was of overabundance of regulation or unnecessary restriction of business activity the third measure was an index based on interview perceptions of corruption corruption perceptions index or cpi in that nation validity of the three measures was further established by finding a highly significant correlation with real gross domestic product per capita rgdp cap the cpi had by far the strongest correlation with rgdp cap explaining over three fourths of the variance corruption is increasingly argued to be a barrier to development and economic growth business students often do not see ethics courses as being as relevant as other value free disciplines or core courses the data in this study suggests otherwise sustainable economic development appears very dependent on a constant virtuous cycle that includes corruption fighting and the maintenance of trust and innovation all reinforcing each other

foreign effects of higher u s interest rates abstract this paper analyzes the spillovers of higher u s interest rates on economic activity in a large panel of 50 advanced and emerging economies we allow the response of gdp in each country to vary according to its exchange rate regime trade openness and a vulnerability index that includes current account foreign reserves inflation and external debt we document large heterogeneity in the response of advanced and emerging economies to u s interest rate surprises in response to a u s monetary tightening gdp in foreign economies drops about as much as it does in the united states with a larger decline in emerging economies than in advanced economies in advanced economies trade openness with the united states and the exchange rate regime account for a large portion of the contraction in activity in emerging economies the responses do not depend on the exchange rate regime or trade openness but are larger when vulnerability is high

do small menu costs explain large business cycles abstract the menu cost approach to business cycle theory is amended for the costs of adjusting factor demand this modification drastically reduces the size of the social externality commonly associated with small menu costs the existence of menu or other small adjustment costs is hence not likely to have explanatory power for large scale economic fluctuations

credit booms and macrofinancial stability this paper explores several questions about credit booms and busts when do credit booms occur when do they end up in busts and when do they not what are the implications for different policies if curbing credit growth and or mitigating the associated risks is an objective we find that credit booms are often associated with financial reform and economic growth they also tend to be more frequent in fixed exchange rate regimes only one in three credit boom episodes are followed by a financial crisis these booms tend to be larger and last longer macroprudential tools have at times proven effective in containing booms and more often in limiting the consequences of busts due to the buffers they helped to build

do corrupt governments receive less foreign aid critics of foreign aid programs argue that these funds often support corrupt governments and inefficient bureaucracies supporters argue that foreign aid can be used to reward good governments this paper documents that there is no evidence that less corrupt governments receive more foreign aid on the contrary according to some measures of corruption more corrupt governments receive more aid also we could not find any evidence that an increase in foreign aid reduces corruption in summary the answer to the question posed in the title is no

on endogenously staggered prices taylor s model of staggered contracts is an influential explanation for nominal inertia and the persistent real effects of nominal shocks however in standard imperfect competition models if agents are allowed to choose the timing of pricing decisions they will typically choose to synchronize this paper provides a simple model of imperfect competition which produces stable staggering our argument relies on strategic interaction at two levels between firms within an industries and across industries and produces a continuum of staggered price equilibria these equilibria are strict and hence stable under a simple adaptive learning process an enduring problem for business cycle theory is an explanation for the persistent effects of nominal shocks explaining persistence is particularly problematic for theories based on nominal shocks as opposed to real shocks this is because rational expectations implies that nominal shocks themselves cannot be serially correlated since nominal shocks are the deviation of realized nominal magnitudes from expected values in two important papers taylor 1979 1980 provided an argument as to why a nominal shock can have persistent effects taylor s argument required two important assumptions first he assumed that firms could adjust prices only in alternate periods an assumption which may be justified by menu or information costs taylor s second assumption was that price setting was staggered half the firms were constrained to adjust prices in odd periods while the other half were allowed to adjust prices in even periods these two assumptions combined to provide dramatic results on nominal inertia the adjustment of prices to a nominal shock is slow and hence output effects are long lasting taylor s results on persistence arise due to strategic complementarity between price setting decisions this implies that each firm s optimal price is an increasing function of the aggregate price level if a shock arrives in an even period firms in the even cohort will not adjust fully to the nominal shock since firms in the odd cohort have fixed prices in the current period furthermore with rational expectations the even cohort also takes into account the fact that its own failure to adjust fully will also make for partial adjustment in future periods this elegant story has made taylor s model possibly the most influential of new keynesian models by providing a dynamic setting within which small nominal rigidities may result in persistent nominal inertia

what drives international financial flows politics institutions and other determinants abstract this paper uses a large panel of financial flow data from banks to assess how institutions affect international lending first employing a time varying composite institutional quality index in a fixed effects framework the paper shows that institutional improvements are followed by significant increases in international finance second cross sectional models also show a strong effect of initial levels of institutional quality on future bank lending third instrumental variable estimates further show that the historically predetermined component of institutional development is also a significant correlate of international bank inflows the results thus suggest that institutional underdeveloped can explain a significant part of lucas lucas robert e 1990 why doesn t capital flow from rich to poor countries american economic review papers and proceedings 80 2 92 96 1990 paradox of why doesn t capital flow from rich to poor countries the analysis also does a first step towards understanding which institutional features affect international banking

tourism demand and economic growth in spain new insights based on the yield curve abstract this study examines for the first time the dynamic relationship between tourism growth and expected macroeconomic conditions of the destination country using a dcc garch model the focus is on the spanish economy in which monthly tourist arrivals data from 1998 to 2017 were collected for five key origin countries and around the world to capture expected macroeconomic conditions the spanish term structure of interest rates is used the results suggest that the tourism expected economic growth relationship is time varying without any country specific differences in the behaviour of the correlations importantly positive correlations reportedly coincides with a regime shift in the spanish economy whereas negative correlations are evident when expected economic conditions are stable it is also shown that the aforementioned relationship is influenced by key geopolitical and economic events the 9 11 terrorist attacks global financial crisis and the ecb s quantitative easing programme finally policy implications derived from the main findings are discussed