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62. Explaining Turkey’s Current Economic Crisis
- Author:
- Erinc Yeldan
- Publication Date:
- 02-2020
- Content Type:
- Working Paper
- Institution:
- Political Economy Research Institute (PERI), University of Massachusetts Amherst
- Abstract:
- Turkey entered a new phase of recession-cum-real economy crisis starting in the last quarter of 2018. In contrast to the previous crisis episodes of 1994, 2001 or 2009, when the economy had abruptly shrunk with a spectacular collapse of asset values and a severe contraction of output, the 2018- crisis is characterized by a prolonged recession with persistent low (negative) rates of growth, dwindling investment performance, debt repayment problems, secularly rising open unemployment, a spiraling currency depreciation and high inflation. Popular explanations from the mainstream tradition attribute this dismal performance to a lack of “structural reforms” and/or exogenous factors. Per contra, our analysis shows that the underlying sources of the crisis are to be found not in the conjunctural cycles of reform fatigue, but rather in the post-2001 neoliberal speculative-led growth model with excessive reliance on hot money flows and foreign debt accumulation. We argue that following the post-2001 orthodox reforms, a foreign-capital-inflow-dependent, debt-led, and construction-centered economic growth model dominated the economy and caused a long buildup of imbalances and increased fragilities.
- Topic:
- Emerging Markets, Financial Crisis, Financialisation, and Economic Crisis
- Political Geography:
- Turkey and Middle East
63. This Time Was Different: The Global Safe Asset Shortage and Shadow Banking in Socio-Historical Perspective
- Author:
- Photis Lysandrou and Anastasia Nesvetailova
- Publication Date:
- 01-2020
- Content Type:
- Working Paper
- Institution:
- City Political Economy Research Centre (CITYPERC), University of London
- Abstract:
- Safe assets and shadow banking are two closely linked phenomena in contemporary finance. The link is loan securitisation: at a time of a global safe asset shortage, it falls on the shadow banking system to help make good that shortage by manufacturing extra quantities of asset backed securities. When these quantities cannot keep up with volume of safe asset demand, the shadow banking system comes under pressure to manufacture the type of complex structured securities that can potentially cause a financial crisis. That potentiality became reality with the great financial crisis of 2007-8. If a further financial crisis of this scale is to be averted, the regulation of the shadow banking system should be informed by an understanding of the contemporary socioeconomic circumstances that continue to cause a global safe asset shortage. This paper attempts to contribute to such an understanding.
- Topic:
- Financial Crisis, Banking, Securitization, and Safe Asset
- Political Geography:
- Global Focus
64. Sovereign debt restructuring: The centrality of the IMF's role
- Author:
- Sean Hagan
- Publication Date:
- 07-2020
- Content Type:
- Working Paper
- Institution:
- Peterson Institute for International Economics
- Abstract:
- Over the past 40 years, the International Monetary Fund (IMF) has played a central role in the sovereign debt restructuring process. If the COVID-19 pandemic leads to a significant wave of sovereign debt distress, this role will be closely scrutinized. The paper analyzes how IMF policies have evolved to shape the incentives of sovereigns and their creditors at each stage of the sovereign debt restructuring process. It also identifies a number of issues that the IMF will likely have to address as a result of the pandemic, including (1) assessment of debt sustainability in a macroeconomic environment of considerable uncertainty, (2) treatment of official bilateral creditors, and (3) potential benefits—and challenges—of introducing additional incentives to maximize creditor participation in any debt restructuring.
- Topic:
- Debt, Emerging Markets, Government, International Monetary Fund, Financial Crisis, Macroeconomics, and COVID-19
- Political Geography:
- Global Focus
65. When more delivers less: Comparing the US and French COVID-19 crisis responses
- Author:
- Jérémie Cohen-Setton and Jean Pisani-Ferry
- Publication Date:
- 06-2020
- Content Type:
- Policy Brief
- Institution:
- Peterson Institute for International Economics
- Abstract:
- The US package of measures to help households hit by the economic shock from the COVID-19 crisis, including the Paycheck Protection Program, is almost twice as large in proportion of GDP as the French package, but it has proven less effective in curbing unemployment because of poor design and implementation. In contrast, the increase in the unemployment rate in France has been five times less than the increase in the United States. Cohen-Setton and Pisani-Ferry dive beneath the unreliable headline numbers to assess the effectiveness of government support provided to households in March–May 2020 in the two countries. They conclude that the French approach (mirrored in some other European countries) delivered a bigger bang for the buck. But the fact that the US approach has fallen short should not diminish the significance of the policy shift signaled by the enactment of measures to maintain household income.
- Topic:
- Education, Financial Crisis, European Union, and COVID-19
- Political Geography:
- Europe, France, North America, and United States of America
66. A possible IMF Pandemic Support Facility for emerging-market countries
- Author:
- Matthew Fisher and Adnan Mazarei
- Publication Date:
- 07-2020
- Content Type:
- Policy Brief
- Institution:
- Peterson Institute for International Economics
- Abstract:
- As the International Monetary Fund (IMF) adapts its strategy to meet the challenges of the COVID-19 crisis, it should develop a new temporary lending instrument to assist emerging-market countries facing pandemic-related fiscal and balance of payments difficulties. A dedicated IMF Pandemic Support Facility would help meet the exceptional financing needs of emerging-market countries at a time of high uncertainty while providing more lenient repayment periods and also allow the Fund to be more flexible in its operations with minimum disruptions to its existing facilities.
- Topic:
- Emerging Markets, International Monetary Fund, Financial Crisis, and COVID-19
- Political Geography:
- Global Focus
67. Lebanon's monetary meltdown tests the limits of central banking
- Author:
- Patrick Honohan and Adnan Mazarei
- Publication Date:
- 09-2020
- Content Type:
- Policy Brief
- Institution:
- Peterson Institute for International Economics
- Abstract:
- Lebanon has spent the last 20 years juggling an excessive level of debt and current account deficits. Apparent financial wizardry by the central bank (Banque du Liban) helped keep the exchange rate fixed, inflation low, and debt service flowing until 2020. But these efforts merely postponed the inevitable, at a high cost. Repeated shocks to the Lebanese economy and governance weaknesses pushed the financial contraption over the cliff before the COVID-19 outbreak. The explosion that ripped through the Port of Beirut in early August added to the disarray. The Lebanese pound has crashed, the government has defaulted on some of its debt, and restrictions have been placed on deposit withdrawals and access to foreign exchange. Lebanon faces an uncertain future of uneven suffering. It will need foreign assistance, but such assistance will not extend to covering the losses of the banking system. How the losses are distributed will set the scene for Lebanon’s future development. Policymakers should aim for fairness, predictability, and stability without overindebtedness.
- Topic:
- Monetary Policy, Financial Crisis, Central Bank, and Banking
- Political Geography:
- Middle East and Lebanon
68. Sovereign debt relief in the global pandemic: Lessons from the 1980s
- Author:
- Edwin M. Truman
- Publication Date:
- 10-2020
- Content Type:
- Policy Brief
- Institution:
- Peterson Institute for International Economics
- Abstract:
- The coronavirus pandemic and an unprecedented global recession have triggered fears of a debt crisis requiring massive intervention by international financial institutions as well as debt restructuring by private and official creditors. Truman draws two lessons for the current crisis, based on his ring-side experience during the debt crises of the 1980s. First, the initiation of debt relief will require a broad consensus among four groups: the borrowing countries, their foreign creditors, the authorities of the countries in which those creditors are located, and international institutions. Reaching consensus takes time. Second, implementation of the consensus framework will be case by case, because of differences in the political and economic circumstances of each country, which will militate against simple replication for different countries and against implementation all at the same time. Any framework will not be self-implementing. While the call for rapid action is understandable, applying a one-size-fits-all approach will not be possible.
- Topic:
- Debt, Emerging Markets, History, International Monetary Fund, Financial Crisis, World Bank, and COVID-19
- Political Geography:
- Global Focus
69. The Impact of COVID-19 on India’s Economy and International Standing
- Author:
- Patryk Kugiel
- Publication Date:
- 07-2020
- Content Type:
- Special Report
- Institution:
- The Polish Institute of International Affairs
- Abstract:
- Despite the government’s restrictive preventive measures, India has emerged as one of the countries most affected by COVID-19, and it has yet to reach the peak of infections. The pandemic has ignited the most serious economic crisis in the country’s history, worsened India’s investment attractiveness, and constrained resources that would otherwise help it pursue a greater international role. The economic crisis also undermines the country’s international image, boosted by the quick and decisive response to the pandemic in its initial phase. At the same time, the economic problems and the continued fight against the pandemic will encourage the authorities to deepen cooperation with the EU in public health, the economy, and security.
- Topic:
- Economics, Financial Crisis, Economy, and COVID-19
- Political Geography:
- South Asia and India
70. External Actors, Good Governance and Health Care Delivery in Africa
- Author:
- Benjamin Uchenna Anaemene
- Publication Date:
- 01-2020
- Content Type:
- Journal Article
- Journal:
- AUSTRAL: Brazilian Journal of Strategy International Relations
- Institution:
- Postgraduate Program in International Strategic Studies, Universidade Federal do Rio Grande do Sul
- Abstract:
- The structural adjustment programme imposed by the World Bank and IMF in the face of the serious economic crisis that confronted African states in the 1980s resulted in severe cuts in state spending on social services including health. State failure in the provision of social services led to the externalisation of responsibility for health and the proliferation of actors working in the field of health across the continent. Despite the positive and negative consequences of this development on Africa, the debate about the role of external actors in health care delivery in Africa has dwelt extensively on the degree they should participate neglecting the emphasis on how they participate, under what conditions and with what consequences. Using qualitative data techniques, this article examines the involvement of external actors in health care delivery in Africa illustrating the nature, pattern, dimensions, and dynamics of such engagements in the context of popular concerns with good governance. It found that governance challenges constitute a serious obstacle to better health outcome in Africa. It posits that African states can only maximise their gains from external assistance for health if they take leadership in coordinating health activities in their countries within the context of a comprehensive national health plan.
- Topic:
- Financial Crisis, Governance, World Bank, and Health Care Policy
- Political Geography:
- Africa