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Exchange rate puzzles and policies
What is the optimal exchange rate policy? Should exchange rates be optimally pegged, managed, or allowed to freely float? What defines a freely floating exchange rate? Do open economies face a trilemma constraint in choosing between inflation...
Distress dependence and financial stability
The proper estimation of distress dependence amongst the banks in a system is key to monitoring the stability of the banking system. Financial supervisors recognize the importance of assessing not only the risk of distress i.e. large losses and possible defaults by a specific bank but also the impact ...
The sources of economic growth: an overview
The importance of economic growth cannot be overstated. Income growth is ssential for achieving economic, social, and even political development. Countries that grow strongly and for sustained periods of time are able to reduce their poverty levels significantly, strengthen their democratic and political ...
Fiscal policy debt crises and economic growth
It is very well known that growth rates play a role in debt dynamics. Despite this widespread knowledge real world narratives of public debt crises often focus almost exclusively on budget deficits and neglect the role of growth. This paper presents the simplest arithmetic possible to illustrate how ...
The transformation and performance of emerging market economies across the great divide of the global financial crisis
Before the Global Financial Crisis, a drive towards greater central-bank autonomy and transparency, as part of the achievement of greater central-bank credibility that had begun in the advanced economies (AE), spread to the emerging market economies...
Central banking with many voices: the communications arms race
Around the world, most central banks set policy by committee. This is motivated in part by the idea that groups reach better decisions than individuals and in part by a desire for representation of different geographical areas and economic...
Competition and stability in banking
Banking went from being one of the most regulated sectors in the economy after the crisis in the 1930s to a more lightly regulated sector with the liberalization process that started in the 1970s in the United States. The previous period was marked by few crises with much more instability in the second ...
The great recession and the great depression: reflections and lessons
My Economics Department colleagues are fond of telling me that as an economic historian I have the advantage that I don’t have to update my lectures in response to events. My history lectures don’t become outdated as quickly as their lectures on say the Great Moderation. The fallacy of this view is ...
Comfort in floating: taking stock of twenty years of freely floating exchange rate in Chile
Chile offers an example of a country that has overcome the fear of floating by reducing balance-sheet mismatches; enhancing financial-market development; and improving monetary, fiscal, and political institutions; while strengthening policy...
Policy evaluation and empirical growth research
This paper explores the implications of the vast body of studies of cross-country growth determinants for the evaluation of alternative policies. Empirical growth studies have experienced a remarkable flowering in the last fifteen years, and innumerable insights have unquestionably been uncovered ...