Great Recession and Macroeconomic Theory: A Useless Crisis?

ABSTRACT

The global financial crisis of 2007–08 and the subsequent Great Recession have pushed many economists to acknowledge a fundamental limit in the theoretical models elaborated after the monetarist counter-revolution: these models disregard the financial system. The years following the Great Recession have thus been marked by the development of what can be called the ‘Financial Frictions Approach’, a theoretical approach based on the addition of the financial system to the New Keynesian DSGE model. The results of this line of research are beginning to appear also in macroeconomics textbooks. Significant examples are the publication of the seventh edition of Blanchard’s textbook, and the publication of the third edition of the textbook co-authored by Blanchard, Amighini and Giavazzi. The objective of this work is twofold: (i) to show that the new model presented by Blanchard, Amighini and Giavazzi, which reflects the results of the ‘Financial Frictions Approach’, does not allow to elaborate a coherent explanation of the Great Recession and (ii) to present the pillars of an alternative theoretical model based on the lessons of Keynes, Schumpeter and Minsky.     

The resilience of formal and informal tourism enterprises to disasters: reef tourism in Phuket,Thailand

This paper explores the resilience of vulnerable tourism sectors to disasters in a period of global change and interdependence. The coral reef tourism industry is highly vulnerable to natural disasters and economic and political shocks. The paper also explains why enterprise resilience is central to sustainable tourism management, for economic, socio-cultural and environmental reasons. It extends the concepts of ecological and social resilience to that of enterprise resilience. Using scenarios and interviews with key enterprise staff, the study contrasts the levels of resilience of formal and informal reef tourism enterprises, and the factors associated with the enterprise resilience in Phuket, Thailand, following the 2004 tsunami and the 2008 political crisis. Informal enterprises reported better financial condition in a crisis scenario and higher levels of social capital in the form of government, family and community support than formal enterprises. Formal and informal enterprises both enjoy high lifestyle benefits from reef tourism, which supports resilience. Most formal enterprises had part foreign ownership/management (61%); no informal enterprise had any foreign ownership or management. Management policies supporting reef tourism should consider local nuances and the importance of lifestyle benefits for both formal and informal enterprises, and take steps to enable enterprise flexibility and cost-cutting during crises.     

外汇市场压力问题的研究综述

本文从外汇市场压力的测度、外汇市场压力与货币政策、外汇市场压力与货币危机的识别与测度以及外汇市场压力与汇率制度四个方面总结了国外研究者对此的最新研究成果,从中我们发现外汇市场压力对于一国经济有着重要的影响,特别是在当前通胀预期下,外汇市场压力与我国资产价格波动和货币政策之间的相互作用过程值得我们去进一步研究。     

Larger crises cost more: Impact of banking sector instability on output growth

We propose a method for calculating the macroeconomic costs of banking crises that controls for the downward impact of recessions on banking activity. This method uses an event-study approach and a multiple-equation identification and estimation technique. In contrast to earlier research, we estimate the cost of crises based on the size of banking crises. The extent of a crisis is measured using banking sector aggregates. The results, based on our method and data from over 100 banking crises, suggest that it is the size of the crisis that matters for economic growth. Lower credit and money growth during crises cause GDP growth to decline.     

How important is fiscal policy cooperation in a currency union?

By constructing a dynamic stochastic general equilibrium model, which assumes a currency union consisting of two countries with nontradables, we study the importance of fiscal policy cooperation. As shown in the previous studies, we find that the role of fiscal policy is important in maximizing social welfare. However, we have a contrary result for fiscal policy cooperation. While the previous studies highlight that fiscal policy cooperation has a nontrivial effect in maximizing social welfare, we show that fiscal policy cooperation has no benefits, regardless of the share of nontradables. Self-oriented fiscal policy can replicate social welfare under the cooperative setting.     

Do currency undervaluations affect the impact of inflation on growth?

In this paper, we investigate how the level of currency undervaluations affects the effect of inflation on growth in a sample of 62 countries over the 1980–2015 period. While previous studies find a positive effect of an undervalued currency, we show that higher currency undervaluations reinforce the contractionary effect of inflation on growth. As an undervalued currency is associated with supplementary inflation pressures arising from a cost-push inflation phenomenon and economy overheating, growth is thus penalized. This result is shown to be robust to the exclusion of currency crises episodes from our sample, and dependent of the development level of countries. Specifically, it holds in the case of emerging countries, but not for developing economies. Consequently, policies based on undervaluations should not be encouraged for emerging economies as they tend to reinforce the contractionary effect of inflation on growth.     

The International Politics of Reactive Currency Statecraft: Japan’s Reaction to the Rise of the Chinese Renminbi

This study analyses how a state’s reactive currency statecraft – its strategic reaction to an international currency issued by a foreign state – is shaped, by devoting special attention to its broad foreign policy stance towards the state issuing that international currency, with a main empirical focus on the Japanese case with regard to the Chinese renminbi. This research argues that a state uses its policy related to a foreign international currency as a diplomatic means of managing its political relationship with the state issuing that currency, while also showing that in general most market actors are not greatly interested in their governments’ policies regarding foreign international currencies, especially those that are newly internationalising ones. This study finds as well that the conventional notion of ‘competition’ between international currencies does not necessarily affect a state’s reactive currency statecraft, even if its own currency is a major international one. All of this suggests that the inter-state politics between the state issuing an international currency and foreign states does have a crucial impact on the currency’s international use, especially during its early stages of internationalisation. It also implies that a state’s reactive currency statecraft can be fluid, depending upon the directions of its foreign policy.     

金融自由化、非对称调整与新兴市场的金融危机

二战后,新兴市场经济(EMS)也存在广泛的金融抑制。抑制政策可能有短期增长效应;但本文理论模型显示,长期内,竞争机制会耗散金融租金,EMS实际增长率低于有保障和自然的增长率。70年代末期以来,EMS放松了金融规制。因价格调整快于数量调整、金融市场调整快于产品和劳动力市场,金融自由化产生负产出效应。负产出是基本的风险源。来自于金融、实际部门的任何冲击以及制度与政策失灵,都可能引发金融危机。抑制程度越深,负产出效应越大,人均产出越低,自由化过程中发生金融危机的概率也越大。本文使用25个国家1980～2001年的数据,以二元选择模型对上述假说进行实证检验。     

“定量宽松”政策的实质及对中国的影响

在当前的国际经济与金融危机环境下,美国等西方国家通过扩大货币的发行量大规模增加时资本市场货币的供应,货币政策的重心向"定量宽松"政策倾斜.关于"定量宽松"货币政策的实质以及对中国的影响,我国经济学界已经展开了广泛的热议.本文认为,对这一问题应据据中国人民银行行长周小川提出的构建"超主权国际储备货币"的建议进行更深入探讨,本文在现有研究基础上,对此进行了进一步分析.     

Insolvency regimes and firms' default risk under economic uncertainty and shocks

One of the arguments often advanced for implementing a stronger insolvency and bankruptcy framework is that it enhances credit discipline among firms. Using a large cross-country firm-level dataset, we empirically test whether a stronger insolvency regime reduces firms' likelihood of defaulting on their debt. In particular, we examine whether it reduces default risk during increased economic uncertainty and various external shocks. Our results confirm that a stronger insolvency regime moderates the adverse effects of economic shocks on firms' default risk. The effects are more pronounced for firms in the top half of the size distribution. We also explore channels through which improved creditor rights influence firms' default risk, including dependence on external finance, corporate leverage, and managerial ethics. Our main results are robust to an alternative measure of default risk, inclusion of currency and sovereign debt crisis episodes, and alternative estimations.