This paper shows that changes in market power explain one of the major commodity crises in recent history. I estimate coffee bean demand and then use the estimates jointly with a model of supply side to recover the effectiveness of the export quota agreement. Of the 73.7% price decline between 1988 and 2001, 53.7% points are attributed to the 1989 cartel breakdown. Growing exports from Vietnam ...

Financial crises are associated with reduced volumes and extreme levels of rates for term inter-bank loans, reflected in the one-month and three-month Libor. We explain such stress by modeling leveraged banks’ precautionary demand for liquidity. Asset shocks impair a bank’s ability to roll over debt because of agency problems associated with high leverage. In turn, banks hoard liquidity and dec...

We model a Systemically Important Financial Institution (SIFI) that is too big (or too interconnected) to fail. Without credible regulation and strong supervision, the shareholders of this institution might deliberately let its managers take excessive risk. We propose a solution to this problem, showing how insurance against systemic shocks can be provided without generating moral hazard. The s...

Economic variables move asymmetrically over the business cycle: quickly during crises but slowly during recoveries. I show that this asymmetry is stronger in countries with less developed financial systems and greater financial frictions. Then I explain this fact using a learning model with endogenous information about economic conditions. Financial frictions, which I capture by higher bankrupt...

This article contrasts the experiences of United States and Kingdom during after Great Recession to understand role financial shocks in magnitude crises length recoveries. It starts from common consensus that first foremost was a crisis.

Brazil is the most decentralized country in the developing world. It has a long history of federalism and decentralization, and has become considerably more decentralized over the last two decades. By 1995, state and local governments together accounted for nearly 60 percent of public consumption (Ter-Minassian, 1997: 438). In comparison with other developing countries, the Brazilian states als...

Financial crises typically occur because firms and financial institutions are highly exposed to aggregate shocks. We propose a theory explain these exposures. study model where entrepreneurs can issue state-contingent claims consumers. Even though use instruments hedge negative shocks, they do not necessarily so insuring against shocks is expensive, as consumers also harmed by them. This effect...

Abstract We measure the contributions of loan supply shocks and other macroeconomic to U.S. output dynamics during Great Depression. Using structural vector autoregressions, we impose sign restrictions identify shocks. find that contributed negatively growth between 1931 1933, at same time as experienced several waves banking crises. Thus, our results support view disruptions in credit availabi...

In recent years, multiple, consecutive shocks have threatened economic resilience and wellbeing worldwide. Governments in OECD countries - democratic systems been at the centre of responding to these crises. While generally responded scale speed, context multiple crises this is unlikely be sufficient. need adopt more advanced practices build trust enhance better weather challenges they face. Ac...

Evidence shows that asset price bubbles typically precede financial crises and financial crises are accompanied by the collapse of bubbles. In addition, stock market booms and busts are typically associated with credit market booms and busts. The recent US housing and stock market bubbles and the subsequent Great Recession that began in late 2007 provide an example. The stock market booms in th...