The macro-micro conflict
There has always been conflict between macro- and microeconomic regulation. Microeconomic policy reigns supreme during good times, and macro during...
Parameterized Games, Minimal Nash Correspondences, and Connectedness
Economics and game theory are replete with examples of parameterized games. We show that all minimal Nash payoff USCOs belonging to the Nash...
Insecure Debt
We analyse bank runs under fundamental and asset liquidity risk, adopting a realistic description of bank default. We obtain an unique run equilibrium...
If Greece defaults, dominoes will not fall
How would a unilateral Greek default affect politics and policy elsewhere in Europe? A Greek default is more likely to strengthen voter support across...
Why Iceland can now remove capital controls
Iceland has just announced it is getting rid of its capital controls. This column argues that the government’s plan is a credible, efficient and fair...
Default and political survival in networked democracies since 1870
Many fear that a Greek default would lead voters elsewhere in Europe to favour default over austerity. This column argues that it is more likely to...
Why risk is so hard to measure
This paper analyzes the robustness of standard risk analysis techniques, with a special emphasis on the specifications in Basel III. We focus on the...
When Arm’s Length Is Too Far. Relationship Banking over the Credit Cycle
Using a novel way to identify relationship and transaction banks, we study how banks’ lending techniques affect credit constraints of small and medium...
Dynamic Equilibrium with Rare Events and Heterogeneous Epstein-Zin Investors
We consider a general equilibrium Lucas (1978) economy with one consumption good and two heterogeneous Epstein-Zin investors. The output is subject to...
News Shocks and Asset Prices
We study the importance of anticipated shocks (news) for understanding the comovement between macroeconomic quantities and asset prices. We find that...
The Dynamics of Financially Constrained Arbitrage
We develop a model of financially constrained arbitrage, and use it to study the dynamics of arbitrage capital, liquidity, and asset prices...
Multilateral surveillance: Ensuring a focus on key risks to global stability
The 2007/9 crisis and the ongoing transformation of the global economy call for a rethink of the scope of the Fund’s multilateral surveillance. This...
What the Swiss FX shock says about risk models
The Swiss central bank last week abandoned its euro exchange rate ceiling. This column argues that the fallout from the decision demonstrates the...
Averting financial crisis
Jeffrey Chwieroth and Jon Danielsson discuss the political challenges of the macroprudential agenda in the ESRC's annual flagship magazine Britain in...
Great Expectations, Veto Players, and the Changing Politics of Banking Crises
How have the politics of banking crises changed over the long run? Unlike existing static accounts, we offer a dynamic theory emphasizing how the...
Brave New World? Macro Prudential Policy and the new Political Economy of The Federal Reserve
The Financial Crisis that started in 2007 ushered in new responsibilities for central banks, particularly for what is termed “macro-prudential policy...
