Tag Archives: financial crises

This article begins with a review of the two main textbook approaches that had evolved by the early 1960s to incorporate the musings of Keynes: the Keynesian cross from Samuelson’s (1948) introductory textbook and the complete, well fleshed-out model in Gardner Ackley’s (1961) advanced macro textbook. This Keynesian- neoclassical synthesis followed a pattern set by Hicks (1937) by focusing on certain elements of Keynes, while setting aside others. Some potential weaknesses of the specific...

If we look at the full history of financial crises around the world, one could argue that crises related to external debt and/or fixed exchange rates are dominant. Such crises could represent an entire chapter of this book. However, I will only offer a brief overview of the subject. From the perspective of recession forecasting, the addition of a fixed exchange rate regime adds a new wrinkle to analysis: at what point will the peg fail, causing a crisis? As I will discuss below, this is...

This article is a continuation of previous comments on financial crises, with two lines of discussion. The first is a bit of a primer, explaining why I and other commentators associate financial crises with a buildup of private debt. The second part discusses the main problem with associating crises with private debt buildups: growth in debt stocks is by itself not enough to trigger a crisis. The catch is a variant of the efficient markets hypothesis: if we could easily forecast crises, it...

Professor Roger E. A. Farmer has written Prosperity For All: How to Prevent Financial Crises, in which he lays out the case for creating a sovereign wealth fund whose objective is to stabilise financial markets. If we can eliminate financial crises, we can avoid the rise in unemployment that results. Although that is an interesting concept, I was highly skeptical about the idea before I read the book -- and my skepticism remains after reading it. Instead, the discussion of macro theory...

Opening remarks by Mr Carlos da Silva Costa, Governor of the Bank of Portugal, at the Bank of Portugal Conference on Financial Stability, Lisbon, 17 October 2017. Bank of International SettlementsCarlos da Silva Costa: Opening remarks - "Conference on Financial Stability"

Asian economies are commended for improving their external balances and building self-insurance by accumulating large amounts of reserves. However, whether these would be sufficient to provide adequate protection against a reversal of capital flows is contentious. After the Asian crisis external vulnerability came to be assessed in terms of adequacy of reserves to meet short-term external dollar debt. However, short-term debt is not always the most important source of drain on reserves....