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Begin New Search Topic Financial Crisis Content Type Working Paper Publication Year within 25 Years

301. How far away is a global recovery?

Publication Date:
03-2009
Content Type:
Working Paper
Institution:
Oxford Economics
Abstract:
Steep drops in output have been recorded across the industrialised world and much of the emerging market world in recent months. Such has been the scale of these declines that there is now little doubt that the global economy is set for its worst year since the end of WWII, with world GDP forecast to fall almost 1½% (and more than 2% at 2000US$). Significant uncertainties nevertheless remain about the economic outlook, in particular about how deep and protracted the recession will prove to be and how rapid an eventual recovery can be expected. A key factor generating uncertainty is that the current recession has been sparked by and accompanied by a major financial crisis. Recessions of this sort are often more severe than 'standard' recessions, featuring deeper and more sustained drops in asset prices, and a weaker impact from policy interventions due to malfunctioning banking systems. Equity and house prices have continued to drop in the early part of 2009, and there looks to be a significant risk that this weakness will drag on for some time – the average duration of stock price declines in previous financial crises is more than three years and for house prices around six years. The financial sector also remains in a highly dysfunctional state. Although the credit tightening process is showing some signs of coming to an end, stress levels remain extremely elevated and risk appetite is low with banks stuck in 'balance sheet repair mode'. This process is unlikely to be complete for some time. Retrenchment has also become a priority for the corporate and household sectors. In the face of a plunge in final demand, firms have slashed investment and begun destocking. Worryingly, the destocking process could continue f or several quarters as the ratio of inventory to sales remains high. US households were net re payers of debt in the final quarter of 2008, and it seems unlikely that the appetite to take on more debt will recover quickly there or elsewhere in the face of steep increases in unemployment and large falls in household wealth. Taylor rule analysis suggests that the 'appropriate' short-term interest rate for the major economies has now turned negative, supporting the big shift to quantitative easing now under way. Eventually, this and other stimuli in the pipeline should produce a strong recovery. But the outlook for 2010 has weakened significantly in recent weeks and the risks remain skewed toward a more deflationary outcome than that envisaged by our baseline forecast.
Topic:
Economics, Markets, Foreign Direct Investment, and Financial Crisis
Political Geography:
United States

302. Eurozone Unity Under Threat?

Publication Date:
03-2009
Content Type:
Working Paper
Institution:
Oxford Economics
Abstract:
Ten years after the introduction of the euro, the onset of deep recession in the Eurozone has triggered concern that the single currency might impose intolerable strains upon some members. With some countries hit hard by the impact of the credit crunch, there are mounting concerns about a possible debt default by one or more member states, which in turn might threaten the euro and even the existence of the Eurozone. With the Eurozone economy forecast to contract by 3.1% this year, unemployment is starting to climb steeply and fiscal deficits are soaring. This has raised concerns about deteriorating public finances in a number of countries, leading to sharply wider spreads on government bonds and credit rating downgrades for Greece, Spain and Portugal, with Ireland maybe facing a similar fate soon. And repercussions from the growing economic crisis in Central and Eastern Europe are adding to the problem, with Austria particularly exposed. Rising bond spreads were always intended to be the mechanism that would restrain public spending by more profligate Eurozone countries. But the question now is whether the weaker economies can withstand the strains that a lengthy period of recession will impose and, at the same time, adopt credible medium-term spending plans to ward off the worst of the downturn and retain market confidence. With fiscal deficits already rising as a result of bank bailouts, fiscal packages and recession will push budget deficits far above the 3% of GDP target – Ireland, facing a deficit of 12% of GDP, and Spain will be worst hit. And with rising deficits and higher bond spreads pushing up the cost of debt, countries face a sharp rise in their level of indebtedness, with Greece and Italy seeing debt/GDP ratios around 100%. This deterioration could lead to a further downward spiral if the recession is prolonged and will be a test of countries' euro commitment, which has remained strong thus far despite rising social tensions in some countries. At this stage, the problems remain manageable and the risk of default or of countries leaving the euro is still very low. Bond spreads are still much lower than during much of the 1990s, when countries were striving to qualify for euro membership, and the currency risks attached to leaving the euro would be substantial. Moreover, EU countries that have been exposed to considerable currency strain over the past year are anxious to join the Eurozone as soon as possible, to take advantage of the benefits of a stable currency. While some smaller countries may experience financial difficulties, it seems inevitable that the larger Eurozone members would step in to stabilise the situation – failure to do so would risk contagion spreading to other countries, which in turn would cause even deeper problems for the euro. More policy action also seems likely to counter this threat – although the German government will probably remain reluctant to countenance the scale of expansionary fiscal policy really needed at this time. Current policies inevitably mean a long hard slog back towards fiscal rectitude in the years ahead, with monetary policy also tightening and growth slower than previously expected. Fiscal federalism may also have to be on the agenda. All this will undoubtedly lead to ongoing strains within the Eurozone. And any measures by governments that appear to be protectionist – such as the support for the French car industry – will only fuel these tensions.
Topic:
Economics, International Trade and Finance, Regional Cooperation, Treaties and Agreements, and Financial Crisis
Political Geography:
Europe and Germany

303. The Economic Outlook for London

Publication Date:
10-2009
Content Type:
Working Paper
Institution:
Oxford Economics
Abstract:
The present recession, which had its origins in the global financial crisis that began to unfold in mid-2007, has hit London's economy hard. And in the face of ongoing financial sector constraints, a debt overhang and rising unemployment, a strong bounce in the immediate future – of the kind seen in the wake of the early1990s recession – cannot be realistically expected. Nevertheless, Oxford Economics' forecasts show the recovery in the capital gaining traction by 2011, with growth into the medium term matching the robust performance of the decade prior to the recession. We expect growth over the period 2011-2019 to outstrip that of the rest of the UK and of most comparable cities across the western world.
Topic:
Economics and Financial Crisis
Political Geography:
United Kingdom, Europe, and London

304. Brazil and the Transatlantic Community in the Wake of the Global Crisis

Author:
Thomas J Trebat
Publication Date:
06-2009
Content Type:
Working Paper
Institution:
Institute for Latin American and Iberian Studies at Columbia University
Abstract:
As the great global crisis eases its grasp, it is a time to reconsider relations between Brazil and the North, especially the United States and the European Union. While the world economy is still reeling, it is very possible that a new and more productive period in Brazil's relations with the US and Europe is possible. This positive outcome derives from numerous factors, most especially Brazil's “peaceful rise” to a more prominent global role and the arrival of the Obama administration whose promise of a new beginning in U.S. foreign policy has been greeted with such evident enthusiasm in Latin America.
Topic:
International Relations, Foreign Policy, Development, Economics, International Political Economy, and Financial Crisis
Political Geography:
United States, Europe, Brazil, and Latin America

305. Global Outlook 2010: What lies ahead for the global economy

Publication Date:
11-2009
Content Type:
Working Paper
Institution:
Economist Intelligence Unit
Abstract:
Leo Abruzzese, Editorial Director for North America, discusses the latest EIU forecast for the world. Forward-looking economic indicators have continued to improve in many countries in recent months, suggesting that the worst of the contraction in global GDP is over. The improvement has triggered hopes of an imminent and sustained global economic recovery. But does this signal the start of a genuine strong recovery, or is it a false dawn, to be followed by months—or even years—of anemic growth? What is the outlook for the US, Canada, and Asia, as well as the major emerging markets, over the next couple of years? And what are the downside risks to this outlook?
Topic:
Economics, International Trade and Finance, Markets, and Financial Crisis
Political Geography:
United States, Canada, Asia, and North America

306. Mortgage Loan Modifications: Program Incentives and Restructuring Design

Author:
Dan Magder
Publication Date:
11-2009
Content Type:
Working Paper
Institution:
Peterson Institute for International Economics
Abstract:
Mortgage defaults and home foreclosures remain a growing problem that undermines the nascent US economic recovery. Delinquencies continue to skyrocket, up 300 percent since the beginning of the crisis, and the contagion has spread to prime loans where delinquencies have risen to over 11 percent of outstanding loans. The resulting foreclosures have broad consequences: Individuals lose their homes, banks take losses on the loans, neighbors suffer as area prices go down, and localities lose on property taxes. The economics of modifying loans to avoid defaults appear strong: Lenders lose an average of $145,000 during a foreclosure compared with less than $24,000 on a modified loan. Yet the track record of modification programs has been surprisingly poor. Potential lawsuits over modifying loans in securitization trusts may be a less important obstacle than many claim. More significant are misaligned incentives that put mortgage servicers in opposition to both investors and borrowers, conflicts between investors holding different tranches of mortgage-backed securities (MBS), operational impediments, and problems in loan modification design that contribute to redefaults. Policymakers should improve reporting metrics to highlight servicers' conflicts of interest, shift the emphasis of loan modifications from short-term fixes to making the new loans more sustainable, and use government resources to drive operational/capacity improvements in the industry.
Topic:
Economics, Markets, and Financial Crisis

307. The Impact of the Financial Crisis on Emerging Asia

Author:
Morris Goldstein and Daniel Xie
Publication Date:
11-2009
Content Type:
Working Paper
Institution:
Peterson Institute for International Economics
Abstract:
This paper analyzes how the global financial crisis has affected emerging Asia and identifies key characteristics that have made these economies more or less vulnerable to a transmission of crises from the advanced economies. After reviewing how economic outcomes in emerging Asia have evolved since the crisis began in the summer of 2007, we review several studies of the effect of financial stress and/or growth slowdown in advanced economies on emerging Asia. We then discuss how emerging Asia is “different” in ways that matter for the contagion of crises, with the emphasis on currency and maturity mismatches, the nature of the region's foreign trade links (product composition, the geographic pattern of trade, and the degree of net export-led growth), financial market integration with the advanced economies, and the scope for implementing countercyclical monetary and fiscal stimulus.
Topic:
Economics and Financial Crisis
Political Geography:
Asia

308. American Multinationals and American Economic Interests: New Dimensions to an Old Debate

Author:
Theodore H. Moran
Publication Date:
07-2009
Content Type:
Working Paper
Institution:
Peterson Institute for International Economics
Abstract:
The 2008 election rekindled debate about whether US multinationals shift technology across borders and relocate production in ways that might harm workers and communities at home. President Obama now pledges to end tax breaks for corporations that ship jobs overseas. The preoccupation about the behavior of American multinationals takes three forms: (1) that US-based multinational corporations may follow a strategy that leads them to abandon the home economy, leaving the workers and communities to cope on their own with few appealing alternatives after the multinationals have left; (2) worse, that US-based multinational corporations may not just abandon home sites but drain off capital, substitute production abroad for exports, and “hollow out” the domestic economy in a zero-sum process that damages those left behind; and (3) worst, that US-based multinational corporations may deploy a rent-gathering apparatus that switches from sharing supranormal profits and externalities with US workers and communities to extracting rents from the United States. Each of these concerns contains a hypothetical outcome that can be compared with contemporary evidence from the United States and other home countries.
Topic:
Economics, International Political Economy, International Trade and Finance, Markets, and Financial Crisis
Political Geography:
United States and America

309. Is the world addicted to bubbles? EIU's Quarterly Global Outlook webinar series

Author:
Robert Ward
Publication Date:
12-2009
Content Type:
Working Paper
Institution:
Economist Intelligence Unit
Abstract:
Global: Recoverology Bounce-back theory: "V". The sharper the contraction, the stronger the recovery Financial-impairment theory: "U", "L" Recoveries following financial crises are much slower than normal recoveries Borrowed-time theory: "W" Stimulus boosts economy at the cost of weakness later Armageddon theory: "Q" Too grim to talk about.
Topic:
Economics, Markets, and Financial Crisis
Political Geography:
Asia

310. Improving Resolution Options for Systemically Relevant Financial Institutions

Publication Date:
10-2009
Content Type:
Working Paper
Institution:
Council on Foreign Relations
Abstract:
There are critical holes in the existing regulatory framework for handling large complex financial institutions that become impaired. First, regulators may not have the legal authority to do what is necessary to resolve a distressed institution's problems, including selling some divisions, closing or liquidating others, renegotiating or abrogating some contracts, and finding parties to manage what is left. Second, even if regulators have the necessary authority over part of the institution, they may not have authority over the whole firm. Holding companies, for example, often have subsidiaries that are incorporated in multiple countries and therefore governed by different legal codes. Third, regulators are unlikely to be aware of all the interconnections within the institution, and between the institution's various subsidiaries and other firms. This uncertainty makes it difficult for regulators to know the best way to restructure a financial institution or, indeed, whether restructuring is even feasible without enormous disruption.
Topic:
Economics, Markets, and Financial Crisis

311. Three Decades of Politics and Failed Policies at HUD

Author:
Tad DeHaven
Publication Date:
11-2009
Content Type:
Working Paper
Institution:
The Cato Institute
Abstract:
The U.S. Department of Housing and Urban Development has long been plagued by scandals, mismanagement, and policy failures. Most recently, HUD's subsidies and failed oversight of Fannie Mae and Freddie Mac helped to inflate the housing bubble, which ultimately burst and cascaded into a major financial crisis.
Topic:
Development, Economics, Markets, and Financial Crisis
Political Geography:
United States

312. How the Asia Pacific Can Drive the Global Recovery

Author:
Peter A. Petri
Publication Date:
11-2009
Content Type:
Working Paper
Institution:
East-West Center
Abstract:
The transition to a new, sustained global growth path is still precarious and will require concerted policy actions by many countries. Leadership by the G-20 will be essential for coordinating the global effort. But due to the central importance of the Asia Pacific in the world economy, regional institutions such as ASEAN+3, ASEAN+6, and APEC could also play large roles in the next phase of the recovery.
Topic:
Economics and Financial Crisis
Political Geography:
Israel and Asia

313. The Great Regression? Financial Crisis in an Age of Global Interdependence

Author:
Vadim Kononenko, Raimo Väyrynen, Toby Archer, Kristian Kurki (ed.), and Matti Nojonen
Publication Date:
12-2009
Content Type:
Working Paper
Institution:
Finnish Institute of International Affairs
Abstract:
The financial crisis and the ensuing global economic downturn have been the focal point of news coverage and policy analysis for over a year now, and speculation has been rife about how things will pan out. At one extreme are those who shrug the situation off as a significant yet transient dent in economic development, with marginal repercussions on the global system. At the other end are those touting the crisis as the first step in an epoch-making transition in the global power balance, where rapidly expanding economies like China, Brazil and India will make gains on the hitherto dominant developed nations, shifting the distribution of power in the world. Whatever the eventual outcome, there is no denying that the crisis's impact on international relations will be significant.
Topic:
Economics, Globalization, Power Politics, and Financial Crisis
Political Geography:
China, India, and Brazil

314. A Copper-Bottomed Crisis? The Impact of the Global Economic Meltdown on Zambia

Author:
Duncan Green
Publication Date:
12-2009
Content Type:
Working Paper
Institution:
Oxfam Publishing
Abstract:
At the time of independence in 1964 Zambia was a middle-income country and appeared set to develop into a prosperous nation. However, the combination of a tumultuous world economy and fiscal mismanagement led to rapid economic decline, which continued unabated into the 1980s and 1990s. Average economic growth from 1990–1999 was the lowest in the region, and unemployment and inflation soared resulting in per capita incomes 50% less in 1999 than they had been 25 years earlier.
Topic:
Economics, Globalization, International Trade and Finance, and Financial Crisis
Political Geography:
Africa

315. Die Anspruchsinflation des Wirtschaftssystems

Author:
Jens Beckert
Publication Date:
09-2009
Content Type:
Working Paper
Institution:
Max Planck Institute for the Study of Societies
Abstract:
The paper takes a theoretical look at the current financial and economic crisis, drawing on existing theories on crises of capitalism. I develop the thesis that the theories of “ungovernability” and “late capitalism” were wrong in locating the origins of crises in contemporary capitalism only indirectly in the economy. The theory of late capitalism, however, rightfully pointed out that the state cannot reduce its influence over the economy without endangering the functioning of markets themselves. This is due less, however, to the difficulty of maintaining loyalty, i.e. political support for the capitalist system than to the more immediate challenge of sustaining the preconditions for the system's economic viability. Today, a theory of the crises of capitalism must devote much more attention to the intrasystemic preconditions of the economic system.
Topic:
Economics, Markets, Political Theory, and Financial Crisis

316. Russia and the Global Meltdown: Domestic and Foreign Policy Responses to the International Financial Crisis

Author:
Robert Jellinek
Publication Date:
03-2009
Content Type:
Working Paper
Institution:
Carnegie Endowment for International Peace
Abstract:
This paper has its origins in the observation that government responses to the global financial crisis are as much political phenomena as they are economic. The current global financial crisis, among its many consequences, has on a very high level shaken up the world political order. And while the crisis is international in origin—its roots lie in the breadth and the degree of the dispersal of risk associated with mortgagebacked securities, as well as the growing imbalance in international capital flows—its resolution is necessarily being carried out first and foremost on a domestic level. This is not least of all because, in the decade since the Asian financial crises, states have begun to play a dramatically increased role in international finance in relation to both multilateral financial institutions such as the IMF and traditional private actors. In an age where global economic ties are integral to domestic economies and where states themselves are becoming some of the biggest players in international capital markets, a state's global financial standing will more than ever determine its political clout on the world stage. With states acting as market makers, lenders of last resort, and regulators of last resort, the key to understanding the future of individual states in the global economic order can be found only by analyzing states' domestic and foreign policy decisions within the context of the specific constraints facing those states at home and abroad.
Topic:
Economics, Emerging Markets, Human Rights, International Trade and Finance, and Financial Crisis
Political Geography:
Russia and Asia

317. Recovery: The Global Financial Crisis and Middle-Income Countries

Author:
Alejandro Foxley
Publication Date:
07-2009
Content Type:
Working Paper
Institution:
Carnegie Endowment for International Peace
Abstract:
No country has proved immune to the devastating effects of the current global financial crisis. But the middle-income countries of Eastern Europe, Latin America, and East Asia, which previously had achieved significant progress—economically and socially—have shown themselves to be particularly vulnerable. The crisis has highlighted important lessons for these countries, which inhabit a twilight zone between the developed and developing worlds?and those that aspire to join their ranks—as they rebuild.
Topic:
Economics, International Trade and Finance, Monetary Policy, and Financial Crisis
Political Geography:
Europe, East Asia, and Latin America

318. Market Versus State: Postcrisis Economics in Latin America

Author:
Alejandro Foxley
Publication Date:
11-2009
Content Type:
Working Paper
Institution:
Carnegie Endowment for International Peace
Abstract:
The global financial crisis has reignited the fierce debate about the roles of the market and the state in modern economies. Latin America, in particular, revisits this debate every time it suffers an external shock. While some blame unregulated markets, others fault states' inability to design institutions or implement policies capable of neutralizing the negative impact of these shocks on output, employment, and social welfare.
Topic:
Economics, International Trade and Finance, and Financial Crisis
Political Geography:
Latin America

319. Renewing Globalization and Economic Growth in a Post-Crisis World The Future of the G-20 Agenda

Author:
Alexei Monsarrat and Kiron K. Skinne
Publication Date:
09-2009
Content Type:
Working Paper
Institution:
Atlantic Council
Abstract:
This statement, delivered by Federal Reserve Chairman Bernanke in the understated manner of a central banker, was made nearly a year after the collapse of Lehman Brothers—the event that tipped the global financial system into full crisis. Bernanke's message starkly reveals the scope of the challenge facing the stewards of the global economy.
Topic:
Economics, International Cooperation, International Trade and Finance, and Financial Crisis

320. NATO and the Economic and Financial Crisis

Author:
Keith Hartley and Binyam Solomon
Publication Date:
10-2009
Content Type:
Working Paper
Institution:
NATO Defense College
Abstract:
These is some consensus among economic forecasters and international economic organizations that the world economy is stabilizing after the worst global contraction since the end of the Second World War. While it is difficult to ascertain empirically whether the massive fiscal policy support played a role or not, the improving credit conditions and the return of demand in the housing market in North America and the UK point to some evidence that the stimulus is providing the necessary short-term boost. Nonetheless, there remain significant challenges that may constrain a quick recovery including the decline in household wealth (debt-laden consumers rebuilding their savings), persistent unemployment and deleveraging (decreasing the amount of debt a firm holds by paying it off) in the financial system together with future long-term prospects of inflation.
Topic:
Economics, International Trade and Finance, and Financial Crisis
Political Geography:
United Kingdom and North America