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Full-Text Articles in Macroeconomics

Restructuring And Forgiveness In Financial Crises D: The Japanese Financial Crisis Of The 1990s, Christian M. Mcnamara, Andrew Metrick Apr 2020

Restructuring And Forgiveness In Financial Crises D: The Japanese Financial Crisis Of The 1990s, Christian M. Mcnamara, Andrew Metrick

Journal of Financial Crises

In November 1997 the Japanese government confronted a problem of enormous proportions when the turmoil that had been roiling the financial markets since the collapse of a real estate and stock market asset bubble in 1990 reached a crescendo with the failure of four major financial institutions in quick succession in the space of a month. Prior to these failures, the damage done by the collapsing bubble had seemed to be limited to certain segments of the financial landscape, and the government’s response consisted largely of targeted intervention when necessary for clearly insolvent financial institutions, with a more comprehensive ...


Restructuring And Forgiveness In Financial Crises B: The Asian Crisis Of 1997, June Rhee, Andrew Metrick Apr 2020

Restructuring And Forgiveness In Financial Crises B: The Asian Crisis Of 1997, June Rhee, Andrew Metrick

Journal of Financial Crises

Asia’s economy, Thailand in particular, was booming when the financial crises hit in the 1990s. However, troubles were brewing underneath the seemingly buoyant economy. With a fragile financial system and ineffective domestic government responses to these troubles, an exchange rate crisis took over Thailand, and this crisis started a financial contagion in the neighboring countries. This case reviews the background and domestic government responses to contain the crisis, and the international intervention provided by the International Monetary Fund including the assistance and the required reforms accompanying the support.


Guarantees And Capital Infusions In Response To Financial Crises C: U.S. 2009 Stress Test, Chase P. Ross, June Rhee, Andrew Metrick Apr 2020

Guarantees And Capital Infusions In Response To Financial Crises C: U.S. 2009 Stress Test, Chase P. Ross, June Rhee, Andrew Metrick

Journal of Financial Crises

When President Obama took office in 2009, the Treasury focused on restarting bank lending and repairing the ability of the banking system as a whole to perform the role of credit intermediation. In order to do so, the Treasury needed to raise public confidence that banks had sufficient buffers to withstand even a very adverse economic scenario, especially given heightened uncertainty surrounding the outlook of the U.S. economy and potential losses in the banking system. The Supervisory Capital Assessment Program (SCAP)—the so-called “stress tests”—sought to rigorously measure the resilience of the largest bank holding companies. Those found ...


Guarantees And Capital Infusions In Response To Financial Crises B: U.S. Guarantees During The Global Financial Crisis, June Rhee, Andrew Metrick Apr 2020

Guarantees And Capital Infusions In Response To Financial Crises B: U.S. Guarantees During The Global Financial Crisis, June Rhee, Andrew Metrick

Journal of Financial Crises

During 2008-09, the federal government extended multiple guarantee programs in an effort to restore the financial market and contain the panic and crisis in the market. For example, the Treasury provided a temporary guarantee program for the money market funds, the FDIC decided to stand behind certain debts and non-interest-bearing transaction accounts, and the Treasury, the FDIC, and the Federal Reserve agreed to share losses in certain assets belonging to Citigroup. This case reviews these guarantee programs implemented during the global financial crisis by the government and explores the different rationale that shaped certain design features of each program.


Basel Iii D: Swiss Finish To Basel Iii, Christian M. Mcnamara, Natalia Tente, Andrew Metrick Jan 2020

Basel Iii D: Swiss Finish To Basel Iii, Christian M. Mcnamara, Natalia Tente, Andrew Metrick

Journal of Financial Crises

After the Basel Committee on Banking Supervision (BCBS) introduced the Basel III framework in 2010, individual countries confronted the question of how best to implement the framework given their unique circumstances. Switzerland, with a banking industry that is both heavily concentrated and very large relative to the size of its overall economy, faced a special challenge. It ultimately adopted what is sometimes referred to as the “Swiss Finish” to Basel III—enhanced requirements applicable to Switzerland’s “too-big-to-fail” banks Credit Suisse and UBS that go beyond the base requirements established by the BCBS. Yet the prominent role played by relatively ...


Basel Iii A: Regulatory History, Christian M. Mcnamara, Thomas Piontek, Andrew Metrick Jan 2020

Basel Iii A: Regulatory History, Christian M. Mcnamara, Thomas Piontek, Andrew Metrick

Journal of Financial Crises

From the earliest efforts to mandate the amount of capital banks must maintain, regulators have grappled with how best to accomplish this task. Until the 1980s, regulation had been based largely on discretion and judgment. In the wake of two bank failures, the central bank governors of the G10 countries established the Basel Committee on Banking Supervision (BCBS) and in 1988, the BCBS introduced a capital measurement system, Basel I. The system represented a triumph of the fixed numerical approach, however, critics worried that it was too blunt an instrument. In 1999, the BCBS issued Basel II, a proposal to ...


Jpmorgan Chase London Whale Z: Background & Overview, Arwin G. Zeissler, Rosalind Bennett, Andrew Metrick Jan 2020

Jpmorgan Chase London Whale Z: Background & Overview, Arwin G. Zeissler, Rosalind Bennett, Andrew Metrick

Journal of Financial Crises

In December 2011, the Chief Executive Officer and Chief Financial Officer of JPMorgan Chase (JPM) instructed the bank’s Chief Investment Office to reduce the size of its Synthetic Credit Portfolio (SCP) during 2012, so that JPM could decrease its Risk-Weighted Assets as the bank prepared to adopt the impending Basel III bank capital regulations. However, the SCP traders were also told to minimize the trading costs incurred to reduce Risk-Weighted Assets, while still maintaining the opportunity to profit from unexpected corporate bankruptcies. In an attempt to balance these competing objectives, head SCP derivatives trader Bruno Iksil suggested in January ...


Incorporating Macroprudential Financial Regulation Into Monetary Policy, Aaron Klein Jan 2020

Incorporating Macroprudential Financial Regulation Into Monetary Policy, Aaron Klein

Journal of Financial Crises

This paper proposes two insights into financial regulation and monetary policy. The first enhances understanding the relationship between them, building on the automobile metaphor that describes monetary policy: when to accelerate or brake for curves miles ahead. Enhancing the metaphor, financial markets are the transmission. In a financial crisis, markets cease to function, equivalent to a transmission shifting into neutral. This explains both monetary policy’s diminished effectiveness in stimulating the economy and why the financial crisis shock to real economic output greatly exceeded central bank forecasts.

The second insight is that both excess leverage and fundamental mispricing of asset ...


Is Diamond A Resource Curse For Africa?, Karli Hamrick Dec 2019

Is Diamond A Resource Curse For Africa?, Karli Hamrick

Undergraduate Economic Review

This paper investigates the resource curse in diamond exporting industry in African countries. The empirical evidence about the “resource curse” is mixed in literature and almost none has been done regarding diamond. Our study aims to bridge that gap. The results suggest that diamond export is positively correlated with well-being in a group of African countries. In other words, the “resource curse” may not occur in diamond mining industry after the Kimberly Process (KP) was put in place in 2002. We argue that the KP serves as a good institution and has created good incentives for firms in the industry ...


Genetically Modified Organisms In The United States Crop Market, Toluwani V. Ogunbayode Dec 2019

Genetically Modified Organisms In The United States Crop Market, Toluwani V. Ogunbayode

Quest

Economic Analysis

Research in progress for ECON 2302: Principles of Microeconomics

Faculty Mentors: Millie D. Black, Ph.D., and Michael Latham, Ph.D.

The following paper represents research begun by students in Honors Principles of Microeconomics. The honors course introduced students to numerous economic models and methods of analysis. Students were asked to identify an economic issue or controversy related to topics studied in class and to provide a literature review relevant to their topic. Students were also asked to provide an economic analysis, discuss opposing viewpoints, present an economic evaluation of various policy options, and make a recommendation regarding ...


Understanding The Characteristics Of Remittance Recipients In Venezuela: A Country In Economic Crisis, Nicole A. Degla Nov 2019

Understanding The Characteristics Of Remittance Recipients In Venezuela: A Country In Economic Crisis, Nicole A. Degla

Undergraduate Economic Review

This essay analyzes household surveys from the World Bank Global Financial Inclusion Database for the years 2011, 2014, and 2017, as a means to distinguish individual level characteristics of remittance recipients in Venezuela. Remittances are defined as “crossborder, person-to-person payments of relatively low value. The transfers are typically recurrent payments by migrant workers to their relatives in their home countries (World Bank, 2015). Through the use of a linear probability model and probit regressions, I examine the variables age, gender, education level, and income quintile. Results of the analysis find that age has a statistically significant negative effect on the ...


European Banking Union C: Cross-Border Resolution–Fortis Group, Rosalind Z. Wiggins, Natalia Tente, Andrew Metrick Nov 2019

European Banking Union C: Cross-Border Resolution–Fortis Group, Rosalind Z. Wiggins, Natalia Tente, Andrew Metrick

Journal of Financial Crises

In August 2007, Fortis Group, Belgium’s largest bank, acquired the Dutch operations of ABN AMRO, becoming the fifth largest bank in Europe. Despite its size and its significant operations in the Benelux countries, Fortis struggled to integrate ABN AMRO. Fortis’s situation worsened with the crash of the US subprime market, which impacted its subprime mortgage portfolio. By July 2008, Fortis’s CEO had stepped down, its stock had lost 70% of its value, and it was on the verge of collapse due to a severe liquidity crisis. The governments of Belgium, Luxembourg, and the Netherlands quickly came together ...


European Banking Union B: The Single Resolution Mechanism, Rosalind Z. Wiggins, Michael Wedow, Andrew Metrick Nov 2019

European Banking Union B: The Single Resolution Mechanism, Rosalind Z. Wiggins, Michael Wedow, Andrew Metrick

Journal of Financial Crises

The options available to European governments to respond to a multinational bank in financial trouble have been severely limited since each country has its own unique laws and authority applicable to banks operating within its borders. The Bank Recovery & Resolution Directive (BRRD), which was adopted in 2013 and scheduled to go into effect January 2015, harmonizes rules across EU countries for how to restructure and resolve failing banks. However, the directive would maintain the existing system of individual national resolution authorities and resolution funds. To better secure the Eurozone banks and to compliment the Single Supervisory Mechanism, which was enacted ...


European Banking Union A: The Single Supervisory Mechanism, Rosalind Z. Wiggins, Michael Wedow, Andrew Metrick Nov 2019

European Banking Union A: The Single Supervisory Mechanism, Rosalind Z. Wiggins, Michael Wedow, Andrew Metrick

Journal of Financial Crises

At the peak of the Global Financial Crisis in fall 2008, each of the 27 member states in the European Union (EU) set many of its own banking rules and had its own bank regulators and supervisors. The crisis made the shortcomings of this decentralized approach obvious, and since its formation in January 2011, the European Banking Authority (EBA) has been developing a “Single Rulebook” that will harmonize banking rules across the EU countries. In June 2012, European leaders went even further, committing to a banking union that would better coordinate supervision of banks in the then 18-country Eurozone. A ...


European Central Bank Tools And Policy Actions B: Asset Purchase Programs, Chase P. Ross, Rosalind Z. Wiggins, Andrew Metrick Nov 2019

European Central Bank Tools And Policy Actions B: Asset Purchase Programs, Chase P. Ross, Rosalind Z. Wiggins, Andrew Metrick

Journal of Financial Crises

Beginning in August 2007, the European Central Bank (ECB) used standard and non-standard monetary policies as the global financial markets progressed from initial turmoil to a widespread sovereign debt crisis. This case describes the key features of the ECB’s asset purchase programs throughout the Global Financial Crisis and subsequent European sovereign debt crisis. These programs include the Covered Bond Purchase Programs (CBPP1, CBPP2, CBPP3), Securities Markets Program (SMP), Outright Monetary Transactions (OMT), Asset-backed Securities Purchase Program (ABSPP) and the Public Sector Purchase Program (PSPP).

In combating the crises, the ECB designed various innovative programs which it successively employed as ...


European Central Bank Tools And Policy Actions A: Open Market Operations, Collateral Expansion And Standing Facilities, Chase P. Ross, Rosalind Z. Wiggins, Andrew Metrick Nov 2019

European Central Bank Tools And Policy Actions A: Open Market Operations, Collateral Expansion And Standing Facilities, Chase P. Ross, Rosalind Z. Wiggins, Andrew Metrick

Journal of Financial Crises

Beginning in August 2007, the European Central Bank (ECB) responded to market turmoil with a variety of standard and non-standard monetary policy tools. This case discusses the operational framework of the ECB’s open market operation tools and standing facilities before and during the financial crisis. Specifically, this case describes the ECB’s use of its main refinancing and longer-term refinancing operations, the expansion of collateral eligible for use in Eurosystem credit operations, and the ECB’s standing facilities, including its marginal lending and deposit facilities.


Ireland And Iceland In Crisis D: Similarities And Differences, Arwin G. Zeissler, Daisuke Ikeda, Andrew Metrick Nov 2019

Ireland And Iceland In Crisis D: Similarities And Differences, Arwin G. Zeissler, Daisuke Ikeda, Andrew Metrick

Journal of Financial Crises

On September 29, 2008—two weeks after the collapse of Lehman Brothers—the government of Ireland took the bold step of guaranteeing almost all liabilities of the country’s major banks. The total amount guaranteed by the government was more than double Ireland’s gross domestic product, but none of the banks were immediately nationalized. The Icelandic banking system also collapsed in 2008, just one week after the Irish government issued its comprehensive guarantee. In contrast to the Irish response, the Icelandic government did not guarantee all bank debt. Instead, the Icelandic government controversially split each of the three major ...


Ireland And Iceland In Crisis C: Iceland’S Landsbanki Icesave, Arwin G. Zeissler, Thomas Piontek, Andrew Metrick Nov 2019

Ireland And Iceland In Crisis C: Iceland’S Landsbanki Icesave, Arwin G. Zeissler, Thomas Piontek, Andrew Metrick

Journal of Financial Crises

At year-end 2005, almost all of the total assets of Iceland’s banking system were concentrated in just three banks (Glitnir, Kaupthing, and Landsbanki). These banks were criticized by certain financial analysts in early 2006 for being overly dependent on wholesale funding, much of it short-term, that could easily disappear if creditors’ confidence in these banks faltered for any reason. Landsbanki, followed later by Kaupthing and then Glitnir, responded to this criticism and replaced part of their wholesale funding by using online accounts to gather deposits from individuals across Europe. In Landsbanki’s case, these new deposits were marketed under ...


Ireland And Iceland In Crisis A: Increasing Risk In Ireland, Arwin G. Zeissler, Karen Braun-Munzinger, Andrew Metrick Nov 2019

Ireland And Iceland In Crisis A: Increasing Risk In Ireland, Arwin G. Zeissler, Karen Braun-Munzinger, Andrew Metrick

Journal of Financial Crises

Ireland went from being the poorest member of the European Economic Community in 1973 to enjoying the second highest per-capita income among European countries by 2007. Healthy growth in the 1990s eventually gave way to a concentrated boom in property-related lending in the 2000s. The growth in the aggregate loan balances of Ireland’s six major banks greatly exceeded the growth in gross domestic product (GDP); as a result, bank loan balances grew from 1.1 times GDP in 2000 to over 2.0 times GDP by 2007. Given the small size of the domestic retail depositor base, the Irish ...


How Do Interest Rates Affect Market Capitalization Growth Rates In The Us?, Philip Carolin Sep 2019

How Do Interest Rates Affect Market Capitalization Growth Rates In The Us?, Philip Carolin

Undergraduate Economic Review

This paper investigates how interest rates affect the market capitalization growth rate of individual companies in the US. The research will distinguish itself from previous literature as it analyzes company and macroeconomic data after the 2008 recession. This is particularly interesting as interest rates have been historically low in this time period. Previous research suggests that since the Great Recession the effects of interest rate changes have decreased. On the contrary I will argue that the effects of interest rates still appear to be significant and substantial when explaining the market capitalization growth rate.


The ‘Security Pacific Letter’: Estimating The Causal Effect Of Securitization On Banks’ Systemic Exposure, Paul-Angelo Dell'isola Sep 2019

The ‘Security Pacific Letter’: Estimating The Causal Effect Of Securitization On Banks’ Systemic Exposure, Paul-Angelo Dell'isola

Dartmouth Undergraduate Journal of Politics, Economics and World Affairs

This paper aims to test the hypothesis of the ‘Safe Asset narrative’

which states that banks became manufacturers of pseudo safe assets to meet

a global shortage of safe assets in the pre-crisis period. In this narrative,

securitization is the mechanism which enables banks to become underwriters

of safe assets. This paper takes this hypothesis to the data and attempts to

estimate the causal effect of securitization on banks’ systemic exposure. In

particular, this paper exploits a regulatory change that occurred in 1987 when

the OCC expanded the scope of assets US national banks could securitize. By

using state-chartered banks ...


The Oppressive Pressures Of Globalization And Neoliberalism On Mexican Maquiladora Garment Workers, Jenna Demeter Jul 2019

The Oppressive Pressures Of Globalization And Neoliberalism On Mexican Maquiladora Garment Workers, Jenna Demeter

Pursuit - The Journal of Undergraduate Research at the University of Tennessee

The international economic trends of globalization and neoliberalism have exposed and enabled the exploitation of Mexican workers, especially women in the maquiladora garment industry. During the 1950s, globalization gave rise to the new international division of labor and transnational corporations (TNCs) that have offshored labor-intensive phases of production to developing countries, many of which have pursued export-led industrialization. Export processing in Mexico was encouraged in the 1960s by Item 807 of the U.S. Tariff Code and Mexico’s Border Industrialization Program. Especially following the Latin American debt crisis of the 1980s, advanced capitalist countries and International Financial Institutions foisted ...


The Argentine Great Depression, Laira Aggarwal, Francois Ries, Alejandro Salvador May 2019

The Argentine Great Depression, Laira Aggarwal, Francois Ries, Alejandro Salvador

Undergraduate Economic Review

The purpose of this paper is to comprehend the business cycle of the Argentine Crisis (1998-2002). The following paper will outline the crisis, starting off with a comprehensive literature review on the topic, analyzing its causes and consequences, followed by a survey on the policy-responses undertaken by the Argentine government to combat the recession. The crisis will then be analyzed in the context of the IS-LM model of macroeconomics.


A Cge-Model Analysis Of U.S. Imposed Automotive Tariffs, Angela Li Apr 2019

A Cge-Model Analysis Of U.S. Imposed Automotive Tariffs, Angela Li

Undergraduate Economic Review

Using a computable generable equilibrium (CGE) model, this research paper evaluates the effects of a U.S. imposed 25% automotive import tariff on NAFTA countries and the European Union, the greatest U.S. automotive trade partners. Three simulations were conducted: the implementation of tariffs with no retaliation, equivalent retaliation on the same products, and retaliation on the top exports of politically significant states, with sensitivity analysis applied in the final scenario. The results demonstrate that the EU is marginally affected while the NAFTA countries experience the greatest increases in prices and reduction in total wages.


A Global View Of What Fixes Information Technology Skills Shortage: Panel Data Analyses Of Countries’ Human And Technology Resources, Benyawarath Nithithanatchinnapat, K. D. Joshi Mar 2019

A Global View Of What Fixes Information Technology Skills Shortage: Panel Data Analyses Of Countries’ Human And Technology Resources, Benyawarath Nithithanatchinnapat, K. D. Joshi

Journal of Global Business Insights

This paper aims to provide evidence of what fixes the information technology skills shortage. The focus is on countries' workforce development factors, i.e., human and technology. The research model was tested using secondary data from multiple sources. An ordinary least square with panel corrected standard errors was used to analyze the data. The results indicate that organizations' staff training and gender parity among science, technology, engineering, and mathematics graduates relate negatively to IT talent shortage; this is consistent in both models the authors tested. This study contributes to the IT workforce literature by being the first study that empirically ...


Hedge Funds In The Periphery: An Analysis Of Structures Influencing Fund Behavior In The Icelandic And Cypriot Financial Crises, Jameson K. Mah Mar 2019

Hedge Funds In The Periphery: An Analysis Of Structures Influencing Fund Behavior In The Icelandic And Cypriot Financial Crises, Jameson K. Mah

Undergraduate Economic Review

Hedge funds are often viewed from a positive or negative lens in the public and academic forum. However, both of these perspectives neglect structuralist factors. This paper analyzes the effect of these antecedent economic, political, and legal structures. I argue that these structures are at the root of hedge fund behavior, particularly during financial crises. The financial crises of two peripheral countries, Iceland and Cyprus, are used as case studies to illustrate how hedge fund involvement diverges as a result of structural factors.


How The Federal Reserve Aided The Peoples Bank Of China In Addressing Its 2015 Stock Market Crash, Alec Buchholtz Mar 2019

How The Federal Reserve Aided The Peoples Bank Of China In Addressing Its 2015 Stock Market Crash, Alec Buchholtz

Journal of Financial Crises

An insight into the July 2015 exchange between the Federal Reserve Board and the People's Bank of China (PBOC) discussing efforts to apply lessons from the 1987 "Black Monday" stock market crash to a similar crash that was occurring in China.


The Early Phases Of The Financial Crisis: Reflections On The Lender Of Last Resort, Timothy F. Geithner Mar 2019

The Early Phases Of The Financial Crisis: Reflections On The Lender Of Last Resort, Timothy F. Geithner

Journal of Financial Crises

This essay discusses the powers and limitations of the Federal Reserve’s role as Lender of Last Resort and how it deployed those powers during the financial crisis of 2007-2009. It considers the Fed’s authorities and the frameworks that it relied on in utilizing its powers to calm markets in turmoil and to assist specific financial institutions.


Given Today's New Wave Of Protectionsim, Is Antitrust Law The Last Hope For Preserving A Free Global Economy Or Another Nail In Free Trade's Coffin?, Allison Murray Feb 2019

Given Today's New Wave Of Protectionsim, Is Antitrust Law The Last Hope For Preserving A Free Global Economy Or Another Nail In Free Trade's Coffin?, Allison Murray

Loyola of Los Angeles International and Comparative Law Review

No abstract provided.


Improvements To Consumption Prediction: Machine Learning Methods And Novel Features, Ian Kinskey, Glenn Oswald, Charles Mccann, Travis Finch, Anthony Tanaydin Jan 2019

Improvements To Consumption Prediction: Machine Learning Methods And Novel Features, Ian Kinskey, Glenn Oswald, Charles Mccann, Travis Finch, Anthony Tanaydin

SMU Data Science Review

Current models for predicting personal consumption expenditures (PCE) employ statistical techniques and rely upon traditional economic features. We compare vector autoregression and random forest regression models using traditional economic features as inputs to predict PCE. Additionally, we develop novel features derived from the earnings call transcripts of publicly traded U.S. companies using natural language processing (NLP) techniques. These new features reduce the mean square error (MSE) of the vector autoregression model by 7% and the random forest model by 23%. We find the random forest models outperformed the vector autoregression models, with a MSE reduction of 68%. We conclude ...