Why DSGEs crash during crises

David F. Hendry, Grayham E. Mizon, 18 June 2014

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In most aspects of their lives humans must plan forwards. They take decisions today that affect their future in complex interactions with the decisions of others. When taking such decisions, the available information is only ever a subset of the universe of past and present information, as no individual or group of individuals can be aware of all the relevant information.

Topics: Macroeconomic policy
Tags: crises, DSGE, law of iterated expectations

Restructuring sovereign debt, 1950–2010: From process to outcomes

Udaibir S Das, Michael G. Papaioannou, Christoph Trebesch, 28 November 2012

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Reinhart and Rogoff (2009) provide an impressive account of the history of sovereign debt crises over the past 200 years. However, they do not discuss the patterns of crisis resolution in detail. How frequent are sovereign debt restructurings? What amounts have been restructured? How long does it take to restructure sovereign bonds or loans?

Topics: International finance
Tags: crises, restructuring, sovereign debt

Precautionary savings in the Great Recession

Ashoka Mody, Damiano Sandri, Franziska Ohnsorge, 22 February 2012

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A key feature of the Great Recession was a striking increase in uncertainty. The volatility of real GDP increased (left chart in Figure 1) and, at the same time, the higher unemployment rate raised the risks of job losses, longer unemployment durations, and, hence, of severe reductions in income (see Carroll 1992 for a similar interpretation of unemployment rates).

Topics: Macroeconomic policy
Tags: crises, OECD, savings

Political constraints in the aftermath of financial crises

Francesco Trebbi, Atif Mian, Amir Sufi, 21 February 2012

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Financial crises of all colours (banking, currency, inflation, or debt crises) leave deep marks on an economy. Deep economic contractions, both in output and employment, are systematic in the interim and in the aftermath of financial crises, as thoroughly documented in research by Reinhart and Rogoff (2009) and Reinhart and Reinhart (2010).

Topics: Politics and economics
Tags: crises, inequalities, reforms

Labour markets on the verge of a regulation crisis

Giuseppe Bertola, 26 May 2009

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Unemployment is now just about the same in France and the Eurozone as a whole (8.8%) and in the US (8.9%). This is a rather unusual coincidence. The trends in Figure 1 show that in the 1960s unemployment in France (and other European countries) was much lower than in the US.

Topics: Labour markets
Tags: crises, regulation, unemployment

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