One of the most striking effects of the recent credit crunch is a huge surge in stock market volatility. The uncertainty over the extent of financial damage, the identity of the next banking casualty, and the unpredictability of the policy response of central banks and governments have all led to tremendous instability.
Will the credit crunch lead to recession?
Nicholas Bloom, 4 June 2008
The Panglossian World of Finance
Daniel Cohen, 3 June 2008
What is the origin of financial crises? A simple fact, a fact that may be summarised as follows: one tends to bet more freely with other people’s money than with one’s own.
Why does the spread between LIBOR and expected future policy rates persist, and should central banks do something about it?
Francesco Giavazzi, 2 June 2008
For a few months now the markets have been concerned by the persistence of a spread between the 1- and 3-month LIBOR (“London Interbank Offer Rate” – the interest rate at which banks lend money to each other without posting collateral) and the comparable overnight index swap rates (OIS), i.e. future expected policy rates (the Federal Funds rate in the U.S.
Let form follow function: In defence of central bank independence
Michael J. Orlando, 24 May 2008
As the effects of the subprime lending (or borrowing, as you prefer) binge continue to wear on the U.S. economy, politicians have reacted with a questionable set of proposals to ease the pain: from adjustable rate freezes to builder subsidies to liquidity access for lenders, it appears that no idea is beyond consideration.
Can Central Banks Go Broke?
Willem Buiter, 17 May 2008
Buiter’s warning: Who is the recapitaliser of last resort for the ECB?
Richard Baldwin, 8 May 2010
The Fed, Bank of England and ECB have recently loaned money to banks against collateral that is riskier than usual – including mortgage-backed securities that are at the heart of the current crisis. Since some of these loans could go bad, questions arise: Can the central bank go broke? Who would recapitalise it if it did?
Keynes and the Crisis
Axel Leijonhufvud, 13 May 2008
Central banking doctrine in light of the crisis
Axel Leijonhufvud, 13 May 2008
On April 8 of this year, Paul Volcker addressed the Economic Club of New York about the current crisis. The Federal Reserve, he noted, has gone to “the very edge” of its legal authority.
Blame the models
Jon Danielsson, 8 May 2008
A well-known American economist, drafted during World War II to work in the US Army meteorological service in England, got a phone call from a general in May 1944 asking for the weather forecast for Normandy in early June. The economist replied that it was impossible to forecast weather that far into the future.
Avoiding Disorderly Deleveraging
Luigi Spaventa, 7 May 2008
- The case for 4% inflationBall
- Helicopter money as a policy optionReichlin, Turner, Woodford
- The banking crisis as a giant carry trade gone wrongAcharya, Steffen
- Everything the IMF wanted to know about financial regulation and wasn’t afraid to askBair
- Rethinking macroeconomic policy: Getting granularBlanchard, Dell'Ariccia, Mauro
- A tale of two depressions: What do the new data tell us? February 2010 updateEichengreen, O’Rourke
- Educated in America: College graduates and high school dropoutsHeckman, LaFontaine
- Eurozone breakup would trigger the mother of all financial crisesEichengreen
- Panic-driven austerity in the Eurozone and its implicationsDe Grauwe, Ji
- Debt, deleveraging, and the liquidity trap: A new modelKrugman
Baldwin, Kawai, Wignaraja, 11 June 2013
Giavazzi, Portes, Weder di Mauro, Wyplosz
CEPR Policy Research
- The "Greatest" Carry Trade Ever? Understanding Eurozone Bank RisksAcharya, Steffen
- Political Credit Cycles: The Case of the Euro ZoneFernández-Villaverde, Garicano, Santos
- Winning by Losing: Incentive Incompatibility in Multiple QualifiersDagaev, Sonin