Systemic sovereign credit risk: Lessons from the U.S. and Europe

We study the nature of systemic sovereign credit risk using CDS spreads for the U.S. Treasury, individual U.S. states, and major Eurozone countries. Using a multifactor affine framework that allows for both systemic and sovereign-specific credit shocks, we find that there is much less systemic risk among U.S. sovereigns than among Eurozone sovereigns. We find that both U.S. and Eurozone systemic sovereign risk are strongly related to financial market variables. These results provide strong support for the view that systemic sovereign risk has its roots in financial markets rather than in macroeconomic fundamentals.     

Social indicators and technology assessment

The relationship between what is known as “social indicators” and what is called “technology assessment” is one between two “social technologies”. Both are at a relatively early stage of development and both carry the burdens associated with great expectations and enthusiastic missionaries.     

Operations analysis—the promise and the pitfalls

Operations Analysis comes to education too highly recommended to be ignored, after having grown into wide usefulness in industry and government. Reservations about its use stem from the differences between industry and education. As the practitioners of Operations Analysis grew in numbers and experience, they became recognized agents in the constantly necessary changes in industry. Education, now lacking well-defined roles for Operations Analysis, might well seek the help of the private sector in using its tools. The pitfalls to be avoided, however, are: decision-making when only information is called for; problem definitions which yield triviality or over-generality; and failure to communicate convincingly to decision-makers. Operations Analysis can fail seriously when it starts from bad data or dubious premises, as well as when it uses ready-made methods without adaptation, or-worst of all-performs in a vacuum.