Michael C. Macchiarola on Stephen H. Axilrod: Inside the Fed – Monetary Policy and Its Management, Martin Through Greenspan to Bernanke
Michael C. Macchiarola
Volume 10, Number 3, 2009, page 201
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Reforming IMF Conditionality
From ‘streamlining’ to ‘major overhaul’
Graham Bird
Volume 10, Number 3, 2009, pages 81 - 104
As it has for many years, International Monetary Fund conditionality is currently receiving much attention in the context of the global financial crisis. At the beginning of the 2000s the Fund introduced a policy of ‘streamlining’ intended to reduce the amount of conditionality and refocus it, with ... Read more
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The IMF, the Credit Crunch and Iceland
A new fiscal saga?
Sheetal K. Chand
Volume 10, Number 3, 2009, pages 19 - 42
Iceland was badly hit by a fundamental mismatch between the assets and international liabilities of her banking system, with severe consequences for the welfare of the population. The country now has an International Monetary Fund programme. The paper asks three questions of the programme: Is it too ... Read more
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The Secret of Canadian Banking: Common Sense?
Laurence Booth
Volume 10, Number 3, 2009, pages 1 - 18
This article looks at the basic reasons why the Canadian banking system was recently judged by the World Economic Forum to be the soundest in the world. It does so by first examining the basic functions of a financial system and what Canadian banks are allowed to do as intermediaries within that sys ... Read more
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Charles Goodhart on Jean-Charles Rochet, Why Are There So Many Banking Crises?
The Politics and Policy of Bank Regulation
Volume 10, Number 1, 2009, pages 181 - 184
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The Dangers of Déjà Vu Economics
Graham Bird
Volume 10, Number 1, 2009
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The Banking Crisis and Inequality
Tim Lankester
Volume 10, Number 1, 2009
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The World Financial Crisis
New economy, globalisation and old-fashioned philosophy
F. Gerard Adams
Volume 10, Number 1, 2009, pages 45 - 58
The world financial crisis of 2008 is a consequence of new financial technologies, new accounting methods and new international linkages. These developments have come at a time when governments have returned to an old-fashioned free market philosophy. This paper links the systemic financial/economic ... Read more
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The Oil-producing Gulf States, the IMF and the International Financial Crisis
Bessma Momani
Volume 10, Number 1, 2009, pages 13 - 24
As the finance-strapped International Monetary Fund (IMF) was placed at the centre of coordinating funding and offering ideas to navigate out of the international financial crisis, it became clear that the international community needed to reinvigorate the emerging market economies’ role in the orga ... Read more
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Sweden’s Bank Nationalisations
Are there lessons for today?
Fredrik Erixon
Volume 10, Number 1, 2009, pages 1 - 12
Many banks are on the verge of bankruptcy and have received support from the government to stay afloat. Measures taken have not sufficed, and an increasing number of economists and commentators are calling for the nationalisation of banks in the United Kingdom and United States. In their advocacy, t ... Read more
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Why do Governments Delay Devaluation?
The political economy of exchange rate inertia
Graham Bird & Thomas D. Willett
Volume 9, Number 4, 2008, pages 55 - 74
In the sequence of currency crises in emerging economies in the 1990s, there
was an observed reluctance to devalue the exchange rate. Although ultimately
adopted, the decision to devalue was usually delayed, often until it could no
longer be avoided. While economic explanations of delay are avail ... Read more
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The Effectiveness of IMF Surveillance
A study on global financial governance
Biagio Bossone
Volume 9, Number 4, 2008, pages 27 - 54
IMF surveillance of the international monetary and financial system is a global
public good. Its effectiveness depends critically on the dynamics that underpin
the mechanisms governing the IMF and global finance. These dynamics, in turn,
reflect the interests and power of influence of countries ( ... Read more
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Singapore’s Sovereign Wealth Funds
The political risk of overseas investments
Friedrich Wu
Volume 9, Number 3, 2008, pages 97 - 122
This paper examines Singapore’s two sovereign wealth funds (SWFs)-the Government Investment Corporation of Singapore (GIC) and Temasek Holdings (Temasek)—and the political risks which they are exposed to in their overseas investments. Wu argues that Temasek has hitherto exposed itself to a greater l ... Read more
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The Sovereign Wealth Funds of Singapore
Anthony Elson
Volume 9, Number 3, 2008, pages 73 - 96
This paper examines the origin, evolution and recent operations of Singapore’s two sovereign wealth funds, Temasek Holdings (TSK) and the Government Investment Corporation (GIC). Singapore is a unique case in that it has two of the oldest and largest sovereign wealth funds. Both funds reflect a long ... Read more
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Credit Crisis 101
(or what happened to “free and clear”?)
Edward Gottesman
Volume 9, Number 3, 2008, pages 47 - 72
Subprime mortgage loans were the catalyst, not the cause, of the crisis. Policy errors in both the public and private sectors stretch back nearly 40 years. Inflation, monetary policy and lax regulation all played a role in allowing individual greed and irrational risk-taking to flourish. The paper p ... Read more
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Risk-Pricing and the Sub-Prime Crisis
Andrew G. Haldane
Volume 9, Number 3, 2008, pages 31 - 46
As the sub-prime crisis celebrates its first birthday, what lessons have been learnt? The crisis was rooted in a misperception problem among end-investors, facilitated by financial engineers selling “tail risk” products. Contrary to the precrisis rhetoric, this tail risk was often transferred to tho ... Read more
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Islamic Economics and Finance
Rodney Wilson
Volume 9, Number 1, 2008, pages 177 - 195
This article provides an introduction to key concepts and methods involved in an Islamic approach to business, investment, risk taking and insurance. The prohibition of riba (interest or usury) profoundly influences the way business transactions and investments are made and financial contract ... Read more
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Two Concepts of the Output Gap
Tim Congdon
Volume 9, Number 1, 2008, pages 147 - 175
Two alternative concepts of the output gap, Keynesian and monetarist, can be distinguished. When they use the phrase, economists should make clear which concept is under discussion. The first concept, developed by Okun in the early 1960s, defines the output gap relative to a full employment notion o ... Read more
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The Future of Financial Regulation
Howard Davies
Volume 9, Number 1, 2008, pages 11 - 34
In light of the recent turmoil in global financial markets and criticisms of the performance of the regulatory system, Sir Howard Davies-who prior to his current appointment as Director of the London School of Economics was Chairman of the Financial Services Authority, the UK’s single financial regu ... Read more
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Challenging Times for UK Monetary Policy
Andrew Sentance
Volume 9, Number 1, 2008, pages 1 - 10
Global economic developments have recently thrown up two major challenges for the setting of UK monetary policy. The recent global financial turmoil threatens to reinforce the slowdown in the UK and globally. But rising energy and commodity prices will push up inflation in the short term, and pose a ... Read more
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The Uneven Build Up of Global Reserves
Ways forward
Rohinton Medhora
Volume 8, Number 4, 2007, pages 143 - 166
The universal, large and uneven build up of international reserves is both a cause and a symptom of fundamental problems in the international financial system. The phenomenon represents several interlinked processes at play, so that "root cause" sorts of arguments must be treated with care. There ar ... Read more
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Sovereign Wealth Funds
What they are and what’s happening
Stephen Jen
Volume 8, Number 4, 2007, pages 1 - 7
Sovereign Wealth Funds (SWFs), much in the news of late, are a new and growing class of funds that are already large in size, and will likely grow very rapidly in the coming years. How they will operate, both in terms of their portfolio allocation and the way in which the managers of these funds com ... Read more
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What Future for Central Banks?
Howard Davies
Volume 7, Number 4, 2006, pages 57 - 85
Central banks around the world differ in their functions, size, efficiency and status. In this article, Sir Howard Davies, a former Deputy Governor of the Bank of England, discusses the development of central banking over the last few years, and where it might go in the future. His main focus is the ... Read more
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The Emergence of a Regional Financial Architecture in Asia
Recent developments and prospects
Anthony Elson
Volume 7, Number 3, 2006, pages 167 - 184
This paper provides an assessment of monetary and financial cooperation in Asia since the regional financial crisis of 1997–98, with a view to determining whether the emerging Regional Financial Architecture in Asia is compatible with the global financial architecture and what are the prospects for ... Read more
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Gold and Silver as Monetary Metals
An overview
John Cooper
Volume 7, Number 2, 2006, pages 133 - 144
Commodity money systems, based upon gold or silver, provided relative economic stability for centuries. On the other hand, our modern paper money system, based upon unbacked government liabilities, is particularly vulnerable to abuse. The various financial crises during the twentieth century bear wi ... Read more
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Are We Heading for a Dollar Crisis?
Graham Bird
Volume 7, Number 1, 2006, pages 159 - 174
The US balance of payments current account deficit is in excess of 5 per cent of GDP. Is this sustainable? A loss of confidence in the dollar could lead to foreign investors selling dollars and to a sharp dollar devaluation. In principle, there could be a dollar crisis. But how likely is it? This pa ... Read more
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Making Capitalism Work for Everyone
Raghuram Rajan & Luigi Zingales
Volume 7, Number 1, 2006, pages 1 - 10
There is a widespread belief that free markets do not benefit the common person, let alone the poor: they are only an instrument for the rich to get richer. Not only is this belief false, but in fact the opposite is true. Free markets are the single most important tools to eliminate poverty and spre ... Read more
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Corporate China Goes Global
Friedrich Wu
Volume 6, Number 4, 2005, pages 171 - 181
Recent high-profile international acquisitions and take-over bids by Chinese companies have attracted much media limelight and raised intense interest in China’s rising outward foreign direct investment (FDI). This paper delineates the macro trends of China’s outward FDI based on the most currently ... Read more
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Monetary Policy in an Uncertain World
Charles Bean
Volume 6, Number 1, 2005, pages 31 - 53
In this article, Charles Bean, Bank of England Chief Economist and member of
the Monetary Policy Committee, reviews and assesses the three types of
uncertainty which affect monetary policymakers: uncertainty about the data;
uncertainty about the nature and persistence of shocks; and uncertainty a ... Read more
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European Financial Market Integration
Distant dream or nascent reality?
Patrice Muller
Volume 5, Number 3, 2004, pages 139 - 158
European Monetary Union and a vigorous legislative agenda have profoundly
changed the environment in which the European financial services industry
operates. These developments should have contributed to a deepening of
financial market integration in the European Union, especially within the
Eur ... Read more
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A Single European Market in Asset Management
Vision and reality
Friedrich Heinemann
Volume 5, Number 1, 2004, pages 133 - 158
In spite of progress with integration, the European single market is still far from
perfect. In particular, financial services markets are still heavily segmented along
national borders—even in the era of the Internet and the Euro. In order to
understand the reasons for and consequences of incomp ... Read more
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China’s Capital Market
Better than a casino
Stephen Green
Volume 4, Number 4, 2003, pages 37 - 54
Throughout the 1990s, China’s stock market was developed as a tool of industrial
policy. It was used to supply capital to state-owned enterprises (SOEs) that
remained controlled by the state and whose performance usually declined after
listing. Secondary market trading was poorly regulated, again ... Read more
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Exchange Rate Regimes
Is there a third way?
Vijay Joshi
Volume 4, Number 4, 2003, pages 15 - 36
This paper argues that (a) for many developing countries, the optimal external
payments regime would be a combination of an intermediate exchange rate with
capital controls and (b) the policy stance and advice of the IMF should reflect
this judgement. The paper uses India as a case study to illus ... Read more
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The Puzzle of the Harmonious Stock Prices
Randall Morck & Bernard Yeung
Volume 3, Number 3, 2002, pages 105 - 119
A peculiar pattern is evident across the stock markets of different countries. In emerging markets, such as Peru and China, all the stocks in the country tend to rise and fall together in the course of ordinary trading. But in developed
countries, such as Denmark and Canada, stocks move independent ... Read more
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Some Facts about Hedge Funds
Harry M. Kat
Volume 3, Number 2, 2002, pages 93 - 123
Hedge funds promise investors the best of both worlds: superior performance and
high diversification potential combined into one. This article discusses a number of recent findings that show that the case for hedge funds is less straightforward than often portrayed. A close look at the available he ... Read more
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Stock Markets and Central Bankers
The economic consequences of Alan Greenspan
Andrew Smithers & Stephen Wright
Volume 3, Number 1, 2002, pages 101 - 124
There is a near-consensus that central bankers should focus their attention on the control of inflation, and should accordingly not pay attention to movements in stock markets. This view is reinforced by the continuing influence of the Efficient Markets Hypothesis (EMH), which maintains that financi ... Read more
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"There Will Be Growth in the Spring"
How credible are forecasts of recovery?
Prakash Loungani
Volume 3, Number 1, 2002, pages 1 - 6
Forecasters are currently echoing Chauncey Gardner’s words that “There will be
growth in the spring”. Or certainly by the summer. Are such forecasts credible?
Yes. This article presents evidence that private sector forecasters have done a
reasonably good job of forecasting recoveries in industria ... Read more
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Cohabiting with Goliath
How small equity exchanges will survive in the future
Avinash Persaud
Volume 2, Number 4, 2001, pages 105 - 116
The surviving legacy of the Long Term Capital debacle of October 1998 is an
increased preference for liquidity among international investors. This process has
a self-fulfilling element with liquidity following investors out of the less liquid
markets and into the more liquid. A closer examination ... Read more
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Bad Market Days
Lessons from the stock market crashes of 1929 & 1987
Harold Bierman
Volume 2, Number 3, 2001, pages 177 - 191
There are a large number of misconceptions regarding the great stock market
crash of 1929 and the crash of 1987. Both crashes occurred when the general level of business was good and getting better. In 1929 there were very few hints that the great depression was two years away. In fact, in recognit ... Read more
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Latin America: The Long and Winding Road to Growth
Federico Foders
Volume 2, Number 2, 2001, pages 143 - 162
This paper reviews recent economic reforms carried out in Latin America and
relates them to the long-run economic trends in the region. After a brief overview
of growth and income distribution patterns of Latin American countries in the
nineteenth and twentieth centuries, the paper addresses some ... Read more
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The Rebirth of the Corporate Bond Market
Bill Robinson, John Raven & Christopher Chua
Volume 2, Number 2, 2001, pages 73 - 104
There has been a major switch from equity to debt finance in recent years,
associated with a fall in the long-term rate of interest. The paper explores the
macro-economic causes of the sea change in interest rates (lower budget deficits,
independent central banks, lower inflation expectations) an ... Read more
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The Emerging Northeast–Southeast Asia Divide and Policy Implications
Friedrich Wu
Volume 2, Number 1, 2001, pages 169 - 180
Since the outbreak of the Asian financial crisis in mid-1997, the gulf between the Northeast Asian economies and Southeast Asian economies has widened as measured by GDP growth rates and size, direct and portfolio investment flows,
stock market capitalisation and trading turnover, as well as foreig ... Read more
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Is Dollarisation a Viable Option for Latin America?
Graham Bird
Volume 2, Number 1, 2001, pages 137 - 147
In the aftermath of the East Asian financial crisis there has been much discussion of exchange rate policy in developing countries. Some observers have suggested that they should opt either for flexible exchange rates or for firmly fixed rates. Adopting the US dollar as legal tender and abandoning t ... Read more
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On Understanding Money
Martin Shubik
Volume 2, Number 1, 2001, pages 95 - 120
Fiat money is a creation of both the state and society. Its value is supported by expectations which are conditioned by the dynamics of trust in government, the socio-economic structure and by outside events such as wars, plagues or political unrest.
The micro-management of a dynamic economy is not ... Read more
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How Clear is the Crystal Ball?
Reflections on the accuracy of growth forecasts
Prakash Loungani
Volume 2, Number 1, 2001, pages 1 - 8
Two salie nt features of growth forecasts are discussed. First, recessions generally arrive before the forecast. Slowdowns are predicted but forecasters are unable or unwilling to call recessions. Second, private sector forecasts tend to be similar to those of official agencies. Some tips for foreca ... Read more
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Sending the Herd off the Cliff Edge
The disturbing interaction between herding and market-sensitive risk management practices
Avinash Persaud
Volume 1, Number 4, 2000, pages 15 - 26
In the international financial arena, policy makers chant three things: market-sensitive risk-management, transparency and prudential standards. The message is we do not need a new world order, just to improve the workings of the existing one. While many believe this is an inadequate response to the ... Read more
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Is there a Case for an Asian Monetary Fund?
Graham Bird & Ramkishen Rajan
Volume 1, Number 2, 2000, pages 135 - 143
The East Asian financial crisis has spawned a number of proposals for institutional reform. Some envisage reforming existing institutions, particularly the International Monetary Fund (IMF), while others suggest that new institutions are needed. Amongst them is the idea of establishing an Asian Mone ... Read more
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Proposals for a better International Financial System
Stephany Griffith-Jones
Volume 1, Number 2, 2000, pages 111 - 133
This paper analyses three essential functions of global financial market management that currently are not properly met, and could best be met by new institutional developments: 1. prudential regulation; 2. provision of official liquidity to countries or markets in crises; and 3. emergency orderly w ... Read more
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