Feb.12
... when sub-prime mortgage crisis hit (Aug. 2007) and up again when Lehman crisis hit (Sept. 2008). ...
... when sub-prime mortgage crisis hit (Aug. 2007) and up again when Lehman crisis hit (Sept. 2008). ...
Macroeconomics - Econproph on Macro
... • Practicality: • Not effective in liquidity trap • Lag times on policy • Balanced budget over cycle • Size of response • Demand-side focus ...
... • Practicality: • Not effective in liquidity trap • Lag times on policy • Balanced budget over cycle • Size of response • Demand-side focus ...
China’s Stock Market Collapse* Jayati Ghosh
... peak in early June. For some stocks, the price-equity values crossed 200. This was clearly crazy and begged for a correction, which was bound to happen. But that correction was untidy in the extreme. Since12 June, stocks have plummeted, and on the worst day in early July they were trading on average ...
... peak in early June. For some stocks, the price-equity values crossed 200. This was clearly crazy and begged for a correction, which was bound to happen. But that correction was untidy in the extreme. Since12 June, stocks have plummeted, and on the worst day in early July they were trading on average ...
Lecture 11
... Key risks associated with QE? • Central bank independence and credibility – CBs banks have taken on new roles such as QE and may now be subject to greater levels of political interference • Inflation expectations – some argue that QE may result in higher inflation in future (but not as yet) • Finan ...
... Key risks associated with QE? • Central bank independence and credibility – CBs banks have taken on new roles such as QE and may now be subject to greater levels of political interference • Inflation expectations – some argue that QE may result in higher inflation in future (but not as yet) • Finan ...
Emerging Markets in Retreat* Jayati Ghosh
... winked at by regulators. Total debt in China increased four times between 2007 and 2014, and the debt-GDP ratio nearly doubled to more than 280 per cent. We now know that these debt-driven bubbles end in tears. The property bubble began to subside in early 2014 and real estate prices have been stag ...
... winked at by regulators. Total debt in China increased four times between 2007 and 2014, and the debt-GDP ratio nearly doubled to more than 280 per cent. We now know that these debt-driven bubbles end in tears. The property bubble began to subside in early 2014 and real estate prices have been stag ...
Japan
... since September, a departure from the ¥456.4 billion in gains made a year earlier, culprit to blame were foreign exchange losses caused by the yen's appreciation and a decline in dividends on shares purchased by the BOJ from major banks ...
... since September, a departure from the ¥456.4 billion in gains made a year earlier, culprit to blame were foreign exchange losses caused by the yen's appreciation and a decline in dividends on shares purchased by the BOJ from major banks ...
Presentation to the 18th Annual Hyman P. Minsky Conference on... World Economies—“Meeting the Challenges of the Financial Crisis”
... financial engineering allowed widespread and complex securitization of many types of assets, most famously in subprime lending. In addition, exotic derivatives, such as credit default swaps, were thought to dilute risk by spreading it widely. These new financial products provided the basis for an il ...
... financial engineering allowed widespread and complex securitization of many types of assets, most famously in subprime lending. In addition, exotic derivatives, such as credit default swaps, were thought to dilute risk by spreading it widely. These new financial products provided the basis for an il ...
DEFINITIONS of FSS Differentiators
... Legal and regulatory framework- laws and regulations pertaining to the functioning of the financial institution, including internal norms and procedures, codes of conduct, conformity rules, consumer protection laws. ...
... Legal and regulatory framework- laws and regulations pertaining to the functioning of the financial institution, including internal norms and procedures, codes of conduct, conformity rules, consumer protection laws. ...
12-20-05 Letter.ppc - Federal Reserve Bank of San Francisco
... accommodative stance was motivated by what Greenspan (2003) called “risk management policy,” in which, to reduce the possibility of deflation, the funds rate was held below the level that would otherwise have been chosen to promote a return to full employment. In effect, the Fed took a calculated ri ...
... accommodative stance was motivated by what Greenspan (2003) called “risk management policy,” in which, to reduce the possibility of deflation, the funds rate was held below the level that would otherwise have been chosen to promote a return to full employment. In effect, the Fed took a calculated ri ...
Expectations of real estate market after the BIG TWO
... -- 10% or 90% can’t buy the housing • Bubble: Trade in high volumes at prices that are considerably at variance with intrinsic values. • Intrinsic value: hard to define. ...
... -- 10% or 90% can’t buy the housing • Bubble: Trade in high volumes at prices that are considerably at variance with intrinsic values. • Intrinsic value: hard to define. ...
Systemic Risk and Regulation
... 2. Negative bubbles (cont.) • In equilibrium some market participants hold a small amount of cash to purchase assets in crisis times – There is an opportunity cost of holding liquid assets in non-crisis times – When the crisis occurs the price falls to “fire sale” levels and they (just) recoup thei ...
... 2. Negative bubbles (cont.) • In equilibrium some market participants hold a small amount of cash to purchase assets in crisis times – There is an opportunity cost of holding liquid assets in non-crisis times – When the crisis occurs the price falls to “fire sale” levels and they (just) recoup thei ...
In theory at least, an asset price can be separated
... For example, under ideal circumstances, a policymaker could recognize an expanding asset price bubble. In this case, the Standard Policy would recommend higher interest rates to offset any economic stimulus generated by the bubble.A Bubble Policy would go further and try to reduce the size of the bu ...
... For example, under ideal circumstances, a policymaker could recognize an expanding asset price bubble. In this case, the Standard Policy would recommend higher interest rates to offset any economic stimulus generated by the bubble.A Bubble Policy would go further and try to reduce the size of the bu ...
The Global Financial Crisis
... instruments as well as regulatory instruments to affect lending • There are supply side and demand side effects of monetary policy • Bank behavior may not depend just on amount of capital – Bank managers’ interest may differ from that of bondholders and shareholders: have to look at their incentives ...
... instruments as well as regulatory instruments to affect lending • There are supply side and demand side effects of monetary policy • Bank behavior may not depend just on amount of capital – Bank managers’ interest may differ from that of bondholders and shareholders: have to look at their incentives ...
the united states vs. japan: compare, or contrast?!
... which are fashioned to fit preconceived conclusions. However, the contrasts seem more convincing and, we believe, supportive of a more favorable outcome for the United States. the economy: beyond the eye of the storm As 2008 came into view, the focus of debate on the direction of the U.S. economy re ...
... which are fashioned to fit preconceived conclusions. However, the contrasts seem more convincing and, we believe, supportive of a more favorable outcome for the United States. the economy: beyond the eye of the storm As 2008 came into view, the focus of debate on the direction of the U.S. economy re ...
Rational and Irrational Bubbles
... in explaining hyperinflations is evidence that there was not a bubble in these cases. The first lesson about bubbles is that all explosive movements are not bubbles. It was entirely rational for people to observe the Reichsbank's monetary acceleration and conclude that the price level would accelera ...
... in explaining hyperinflations is evidence that there was not a bubble in these cases. The first lesson about bubbles is that all explosive movements are not bubbles. It was entirely rational for people to observe the Reichsbank's monetary acceleration and conclude that the price level would accelera ...
October 31, 2015 — Market Comment
... become more of a force in consumer-led growth, affected most by changes in household wealth at a time when weak income gains restrain spending by other households. Worsening wealth and income inequality foster re-distributional policies typically detrimental to the kind of growth needed to promote e ...
... become more of a force in consumer-led growth, affected most by changes in household wealth at a time when weak income gains restrain spending by other households. Worsening wealth and income inequality foster re-distributional policies typically detrimental to the kind of growth needed to promote e ...
Chapter 21
... Asset bubbles occur when the prices of some asset, like stocks or real estate, increase rapidly due to some combination of low interest rates, high leverage, new technology, and large, often selffulfilling, shifts in demand. The expectation of higher prices in the future, combined with high leve ...
... Asset bubbles occur when the prices of some asset, like stocks or real estate, increase rapidly due to some combination of low interest rates, high leverage, new technology, and large, often selffulfilling, shifts in demand. The expectation of higher prices in the future, combined with high leve ...
Monetary policy and asset prices
... the Fed generated and accommodated a huge asset bubble. 5 After the bubble burst, huge losses in the balance sheets of financial institutions caused massive deleveraging, a stop of lending, faltering demand, lower output and employment, and ultimately negative consumer price inflation. This sequence ...
... the Fed generated and accommodated a huge asset bubble. 5 After the bubble burst, huge losses in the balance sheets of financial institutions caused massive deleveraging, a stop of lending, faltering demand, lower output and employment, and ultimately negative consumer price inflation. This sequence ...
Bubbling Spanish Housing
... today is only because investors believe that the selling price will be high tomorrow - when 'fundamental' factors do not seem to justify such a price - then a bubble exists." ...
... today is only because investors believe that the selling price will be high tomorrow - when 'fundamental' factors do not seem to justify such a price - then a bubble exists." ...
Center for Economic and Policy Research
... them a strong incentive to default on their mortgage and simply turn over their house to the mortgage holder. ...
... them a strong incentive to default on their mortgage and simply turn over their house to the mortgage holder. ...
Licence to speculate
... possibility of a return to inflation. Inflation has not been the subject of polite conversation since Volcker pushed 10-year US treasury yields to 16% in the early 1980s. Even so, markets are likely to come around to the new reality soon enough, because asset price inflation and conventional inflati ...
... possibility of a return to inflation. Inflation has not been the subject of polite conversation since Volcker pushed 10-year US treasury yields to 16% in the early 1980s. Even so, markets are likely to come around to the new reality soon enough, because asset price inflation and conventional inflati ...
ECONOMICS IS NOT ALWAYS ECONOMICAL
... they have been buying assets in order to help fuel an economic recovery. This is beyond unprecedented and these actions could not have been fathomed only a decade ago. These entities again, similar to Chinese authorities, are playing large roles in markets without the regard for a return on investme ...
... they have been buying assets in order to help fuel an economic recovery. This is beyond unprecedented and these actions could not have been fathomed only a decade ago. These entities again, similar to Chinese authorities, are playing large roles in markets without the regard for a return on investme ...
Economic bubble
An economic bubble (sometimes referred to as a speculative bubble, a market bubble, a price bubble, a financial bubble, a speculative mania or a balloon) is trade in an asset at a price or price range that strongly deviates from the corresponding asset's intrinsic value. It could also be described as a situation in which asset prices appear to be based on implausible or inconsistent views about the future.Because it is often difficult to observe intrinsic values in real-life markets, bubbles are often conclusively identified only in retrospect, when a sudden drop in prices appears. Such a drop is known as a crash or a bubble burst. Both the boom and the burst phases of the bubble are examples of a positive feedback mechanism, in contrast to the negative feedback mechanism that determines the equilibrium price under normal market circumstances. Prices in an economic bubble can fluctuate erratically, and become impossible to predict from supply and demand alone.While some economists deny that bubbles occur, the cause of bubbles remains disputed by those who are convinced that asset prices often deviate strongly from intrinsic values. Many explanations have been suggested, and research has recently shown that bubbles may appear even without uncertainty, speculation, or bounded rationality. In such cases, the bubbles may be argued to be rational, where investors at every point fully compensated for the possibility that the bubble might collapse by higher returns. These approaches require that the timing of the bubble collapse can only be forecast probabilistically and the bubble process is often modelled using a Markov switching model. It has also been suggested that bubbles might ultimately be caused by processes of price coordination or emerging social norms.