The EEAG Report on the European Economy 2009 has just been released. This report is written by a panel of excellent economists and is full of interesting analysis. In particular, Chapter 2 provides an outstanding primer on understanding the financial crisis.
Month: February 2009
Lars Jonung at the European Commission has released a new paper on this topic: you can download it here.
Abstract: This study presents the main features of the Swedish approach for resolving the banking crisis of 1991-93 by condensing them into seven policy lessons. These concern (1) the importance of political unity behind the resolution policy, (2) a government blanket guarantee of the financial obligations of the banking system, (3) swift policy action where acting early was more important than acting in exactly the right manner, (4) an adequate legal and institutional framework for the resolution procedures including open-ended public funding, (5) full disclosure of information by the parties involved, (6) a differentiated resolution policy minimizing moral hazard by forcing private sector participants to absorb losses before government financial intervention, and (7) the proper design of macroeconomic policies to simultaneously end the crisis in both the real economy and the financial sector.
Here‘s me in today’s Irish Times arguing against the current bad bank and risk insurance proposals.
I hope the Irish government thinks about and takes seriously these comments by Adam Posen, reported by Paul Krugman.
His IIEA lunchtime speech today is available here.