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Rethinking Stabilization Policy : Evolution or Revolution?

Blanchard, Olivier - 2018

The obvious lesson from the Great Financial Crisis is that the financial system matters and financial crises will probably happen again. The second, more general, lesson is that the economy is often not self-stabilizing. These two lessons, together with an environment where neutral interest...

Persistent link: https://www.econbiz.de/10012931204

Negative Bubbles : What Happens after a Crash

Goetzmann, William N. - 2017

We study crashes using data from 101 global stock markets from 1692 to 2015. Extremely large, annual stock market declines are typically followed by positive returns. This is not true for smaller declines. This pattern does not appear to be driven by institutional frictions, financial crises,...

Persistent link: https://www.econbiz.de/10012947635

Managing Credit Booms and Busts : A Pigouvian Taxation Approach

Jeanne, Olivier - 2010

We study a dynamic model in which the interaction between debt accumulation and asset prices magnifies credit booms and busts. We find that borrowers do not internalize these feedback effects and therefore suffer from excessively large booms and busts in both credit flows and asset prices. We...

Persistent link: https://www.econbiz.de/10013138082

External Imbalances and Financial Crises

Taylor, Alan M. - 2012

In broad perspective, there have been essentially two competing views of the global financial crisis, albeit there are some complementarities among them. One view looks across the border: it mainly blames external imbalances, the large-scale mix of unprecedented pattern current account deficits...

Persistent link: https://www.econbiz.de/10013096849

Understanding the Great Depression : Lessons for Current Policy

Cecchetti, Stephen G. - 2021

Over the four years beginning in the summer of 1929, financial markets, labor markets and goods markets all virtually ceased to function. Throughout this, the government policymaking apparatus seemed helpless. Since the end of the Great Depression, macroeconomists have labored diligently in an...

Persistent link: https://www.econbiz.de/10013224184

De Facto Fiscal Space and Fiscal Stimulus : Definition and Assessment

Aizenman, Joshua - 2010

We define the notion of a 'de facto fiscal space' of a country as the inverse of the tax-years it would take to repay the public debt. Specifically, we measure the outstanding public debt relative to the de facto tax base, where the latter measures the realized tax collection, averaged across...

Persistent link: https://www.econbiz.de/10013135878

Boom-Bust Cycles in Middle Income Countries : Facts and Explanation

Tornell, Aaron; Westermann, Frank - 2021

In this paper we characterize empirically the comovements of macro variables typically observed in middle income countries, as well as the boom-bust cycle' that has been observed during the last two decades. We find that many countries that have liberalized their financial markets, have...

Persistent link: https://www.econbiz.de/10013240937

House Price Moments in Boom-Bust Cycles

Sinai, Todd M. - 2012

This paper describes six stylized patterns among housing markets in the United States that potential explanations of the housing boom and bust should seek to explain. First, individual housing markets in the U.S. experienced considerable heterogeneity in the amplitudes of their cycles. Second,...

Persistent link: https://www.econbiz.de/10013098388

Monetary Policy for a Bubbly World

Asriyan, Vladimir - 2016

We propose a model of money, credit and bubbles, and use it to study the role of monetary policy in managing asset … bubbles. In this model, bubbles pop up and burst, generating fluctuations in credit, investment and output. Two key insights … emerge from the analysis. First, the growth rate of bubbles, which is driven by agents' expectations, can be set in real or …

Persistent link: https://www.econbiz.de/10012982946

The Cost of Business Cycles and the Benefits of Stabilization : A Survey

Barlevy, Gadi - 2021

This article reviews the literature on the cost of U.S. post-War business cycle fluctuations. I argue that recent work has established this cost is considerably larger than initial work found. However, despite the large cost of macroeconomic volatility, it is not obvious that policymakers should...

Persistent link: https://www.econbiz.de/10013229013