Two observations suggest that financial globalization played an important role in the recent financial crisis. First, more than half of the rise in net borrowing of the U.S. nonfinancial sectors since the mid 1980s has been financed by foreign lending. Second, the collapse of the U.S. housing and mortgage-backed-securities markets had worldwide effects on financial institutions and asset market...

Countries around the world have fallen into one of the deepest recessions since the Great Depression—a recession exacerbated by a severe financial crisis. Among the challenges that face monetary policymakers in such uncertain times is the danger economies worldwide, including the United States, Japan, and the euro area, may enter a period of deflation, in which the prices of goods and services ...

The comparative study of social policy in developing countries is of recent vintage.1 Yet the middle-income countries of Latin America, East Asia, and Eastern Europe have welfare systems that originated in the early post­ war period. The questions posed by these systems are the same as those that motivate the literature on the advanced welfare state: Why did gov­ ernments undertake the provisio...

The economic literature provides useful insights into the nature and causes of the current crisis. I am thinking in particular of the literature highlighting the fragility of equilibria and the possibility of self-fulfilling prophecies. A literature that includes the seminal work of Diamond and Dybvig (1983) on bank runs, which has inspired a large number of papers dealing with financial crises...

The increasing frequency and scope of financial crises has made global financial stability one of the major concerns of economic policy and decision makers. Under this highly complex environment, supervision of the financial system has to be thought of as a systemic task, focusing not only on the strength of the institutions but also on the interdependent relations among them, unraveling the st...

A Markov switching DSGE model with financial frictions investigates the effects of unconventional monetary policy (UMP) exit strategies. Agents in the model have rational expectations about the probability of financial crises, the probability of a UMP response to crises, and the exit strategy used. Selling off assets quickly produces a doubledip recession; in contrast, a slow unwind generates a...

The Common Agricultural Policy (CAP) was fundamentally reformed in 2003. From 2005, farmers will receive decoupled income support payments instead of production premiums if basic standards for environment, food safety, animal health and welfare are met. Farmers are likely to adjust production and management practices to the new policy framework. We describe how this reform fits into the EU stra...

abstract financial crises and currency instabilities within developing and emerging economies during the last decade had a tremendous impact on the economic performance and increased vulnerability of economies against domestic and foreign shocks. the timing of capital liberalization is one of the significant debates among other issues related to currency instability, and it would be more conven...