Financial crises are accompanied by permanent drops in economic growth and output. Technological progress innovation important drivers of growth. Using cross-country panel data on patenting at the industry-level, we connect these facts show that financial have large long-lasting impacts (measured patenting) for sectors dependent external finance. This effect is driven banking crises, which both...

This paper develops a tractable macroeconomic model with a banking sector in which banks face endogenous borrowing constraints. There is no uncertainty about economic fundamentals. Banking bubbles can emerge through a positive feedback loop mechanism. Changes in household confidence can cause the bubbles to burst, resulting in a financial crisis. Credit policy can mitigate economic downturns. T...

In this paper we provide a theory of money markets and private money. We show that preserving symmetric ignorance in liquidity provision is welfare maximizing and strictly dominates symmetric or even perfect information. A key property for the functioning of money markets is when agents have no need to ask questions and no incentive to produce private information about the value of the security...

We study the use of fines and inspections to control production activities that create external damages. The model contains a continuum of firms, differing in their compliance costs, so that only high-cost firms evade the regulations. Modifying the usual Pigou rule for taxing externalities to account for costly inspections, the external damage from the marginal evader’s activities should exceed...

This paper develops a network model of interbank lending in which unsecured claims, repo activity and shocks to the haircuts applied to collateral assume centre stage. We show how systemic liquidity crises of the kind associated with the interbank market collapse of 2007–2008 can arise within such a framework, with funding contagion spreading widely through the web of interlinkages. Our model i...

The paper focuses on regional trade agreements and economic co-operation and develops a new appropriate approach to study their impact on growth and trade. The approach is based on an endogenous trade-growth theory and novelly specified in an economic integration (expenditure) framework which is the conceptual foundation of regional trade agreements. Importantly, it also appropriately takes int...

The emergence of economic crises has forced countries to reform the development strategy with a view to improving economic management. The intervention of governments in the free functioning of the market to reduce social problems by paying subsidies in general and fixing prices have a lot of problems Which makes the information provided by the companies unrealistic and unviable. The most impor...

This chapter surveys the literature on bubbles, financial crises, and systemic risk. The first part of the chapter provides a brief historical account of bubbles and financial crisis. The second part of the chapter gives a structured overview of the literature on financial bubbles. The third part of the chapter discusses the literatures on financial crises and systemic risk, with particular emp...

Neoliberal logic and institutional lethargy may well explain part of the reason why governments pay little attention to how their economic and development policies negatively affect health outcomes associated with the global diffusion of unhealthy commodities. In calling attention to this the authors encourage health advocates to consider strategies other than just regu...