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