Research on the Crisis

You may be interested in the papers that will be presented at the Economic Policy Panel meeting in Warsaw over the next two days, supported by the National Bank of Poland.  The papers are available here.

The list includes

  • a comprehensive overview of eurobonds by Carlo Favero and Alessandro Missale
  • how housing slumps end by Agustin Benetrix, Barry Eichengreen and Kevin O’Rourke
  • the interplay between sovereign risk and banking-sector risk in European bond markets by Ashok Mody and Damiano Sandri
  • a new proposal for automatic recapitalisation of banks by Patrick Bolton and Frederic Samama

The full list is:

Financial Liberalization and Reversals: Political and Economic Determinants
Nauro Campos (Brunel University)
Fabrizio Coricelli (University of Paris I and PSE)

Venture Capital and Industrial Innovation: Evidence from Europe
Alexander Popov (European Central Bank)
Peter Roosenboom (Erasmus University)

Reassessing the Fiscal Mix for Successful Debt Reduction
Emanuele Baldacci (IMF)
Sanjeev Gupta (IMF)

Sovereign Spreads in the Euro Area. Which Prospects for a Eurobond?
Carlo Favero (IGIER, Università Bocconi)
Alessandro Missale (Università degli Studi di Milano)

The Eurozone Crisis: How Banks and Sovereigns Came to be Joined at the Hip
Ashoka Mody (IMF)
Damiano Sandri (IMF)

Recapitalization, Credit and Liquidity
Mike Mariathasan (European University Institute)
Ouarda Merrouche (European Securities and Markets Authority)

How Housing Slumps End
Agustín Bénétrix (Trinity College, Dublin)
Barry Eichengreen (University of California, Berkeley)
Kevin O’Rourke (Trinity College, Dublin)

Capital Access Bonds: Contingent Capital with and Option to Covert
Patrick Bolton (Columbia University)
Frederic Samama (Amundi – Credit Agricole Group)

11 replies on “Research on the Crisis”

Sounds excellent. Would like to think that the Mody paper would not simply be a picture of Mssrs Lenihan and Co late of this state…

Benetrix, Eichengreen & O’Rourke – broadly – and soley on a keyword scan … tend to support the big slump on house prices suggested by Morgan Kelly …

On venture capital (another good paper here) and the real economy – anyone around here in this space who might provide a brief view of what (if anything) is happening – and I suspect that something is. On this – pity that gov policy of the PD-FF Gang of 4 [McGreevey, Harney, McDowell, Ahern] encouraged un-productive, as distinct from real wealth/welfare creation, activity …. Heterodox Hennigan? U out there?


Transcript of “Lost Decades: The Making of America’s Debt Crisis and the Long Recovery”
Washington, DC
Friday, October 14, 2011
GEORGE AKERLOF, International Monetary Fund
MENZIE CHINN, University of Wisconsin, Madison, Econbrowser
JEFFRY FRIEDEN, Harvard University
GAIL COHEN, Joint Economic Committee of the U.S. Congress
DIANE LIM ROGERS, Concord Coalition
SIMON JOHNSON, Massachusetts Institute of Technology, Peterson Institute

Transcript of “Lost Decades: The Making of America’s Debt Crisis and the Long Recovery”

@ DO’D: Thanks for that link.

“Long Recovery”???? From where to what? I have a bad hunch about the ability of developed, western economies with heavy debt burdens to be ever able to ‘return to growth’. Sure, things will bottom out – sometime, but recovery? Wake me up when the price of Brent crude is below $80 /bl AND global liquids production (excluding gas and coal to liquids and biofuels) is edging past 90 mil bl/d. If these targets are not achieved before 2015 – its bye-bye time.

Brian Snr.

It’s a good while since we had a scorcher from Morgan Kelly in the IT. Maybe he doesn’t have the same sort of rapport with Sir as he did with Madam. I would love to read what he has to say now.

@Brian Woods snr

On the IMF Link

Take a look at ‘Household Debt’ Graph – little Ireland is in the Gold Medal Position – legacy of the gang of 4.

I’m sure Monsieur Kelly is beavering away – but too diplomatic to be the trigger for an … er … CREDIT EVENT at the mo. I’d Love a CREDIT EVENT – can’t find anyone who can get credit ….

Ireland is the most indebted in the developed world at the mo – when ALL the debt is aggregated …. course Lucinda don’t want any of those Greek procedures to contage around here … and Enda working hard to look serious and solemn and say nottin – Where is Minister Noonan?

Here we are again getting this excess savings abroad idea (first speaker)
How did the Chinese get their dollar savings ?
American banks gave their customers credit , they bought Chinese products , the Chinese received dollars for their trouble and they turned this into a term account called treasuries.
Contrary to what the speaker says I think it was the lack of RATIONAL American DOMESTIC fiscal debt SPENDING on real core CAPITAL that caused the American malinvestment crisis.
After 2001 much of the goverment debt was spent in the Gulf and elsewhere much like during the Vietnam era – this caused a goverment defecit – which created a market for more treasuries again.
During 1999ish time even Greenspan stated he could not conduct effective monetory policey when the fiscal side was pushed into surplus by the Clinton / Rubin administration.
– Watch the federal fund balance being pushed into surplus during 1999 in the second graph.
Is this not like Irish Central goverment funds Philip ?
It was only at 2.5% of GNP in 2008.
Consistence ?

What does Goverment debt actually do in practise from a monetory perspective ? – it subtracts from credit deposits , thats all it really does as it stays on commercial bank balance sheets – Goverment debt is spent for good or ill but it is not leveraged unless the EFSF thingy in Europe gets its way.
People are less inclined to malinvest if they cannot get into personnel debt & or banks cannot legally leverage the deposits that now do not exist.

Despite what the Euro boys say – fiscal debt prevents malinvestment , the euro zone can only work with its current rules if Gold is at something like the M1 price creating another large base much like US treasuries provide a world reserve base now.

Not many Irish economists are asking the real question about the Irish malinvestment episode.
The worst debt episode happened when the Irish fiscal debt was pushed into near surplus.
And now the mantra is to reduce fiscal debt !!!!!!!!!
That will create even more instability.
Banking systems need large bases to be stable – goverment debt is the base baby.
Without a high ratio of goverment debt relative to credit banks will nearly always implode as they will be lending into a false economic ecosystem.

The most important metric is not the debt to GDP ratio – it is the ratio of goverment debt relative to the M3.
Most of the modern bank credit is net negative to GDP – thats why goverment debt relative to GDP is so high now in Japan – its a legacey of decades of credit malinvestment – the scale of Goverment debt relative to GDP is not bad or Good – it just is.
We have a banking system in the west that not only cannot create any wealth – its credit activities destroys wealth !!!

I think the Bush tax cuts was all about creating a defecit market for Greenspans monetory activities while rewarding his cronies
The man like Bernanke does not see a real physical economy – he was just looking at monetory operations.
Crazy is it not ?

@DO’D: Yeah, I saw that! They used GDP? If it was GNP (which the econs say is more appropriate) – the damn plot-line goes off the top of the figure!

Notice the line of text just below fig: 4?? – “It leads people, households, to rationally build up debt”. Households? That would be H creditus? or what? Rationally in same sentence as debt! “Who ARE those guys?”

The whole thing is “Ho, hum” stuff. We know what happened, and we know how (mostly), but a few teensey bits are missing: like the links between credit, energy use and economic output (as measured by G*P). There is a causal process in there, but it is proving somewhat problematic in sorting out. Lots of ‘unknown unknowns’.

Reading and watching some of the pap and guff, you begin to sympathise with Mr Orwell. ‘Four legs’ are surely better! You can sit up using the posterior pair, whilst you grab what you can with the anterior pair. Poor (temporarily) little Ollie T had to hold his bowl.

Are we being taken for bunch of total gobshites?

Brian Snr.

Are we being taken for bunch of total gobshites?

Looks like it – at least 99% of us are.

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