The ‘fear factor’: Personal experience and risk aversion in times of crisis

Peter Koudijs, Hans-Joachim Voth 12 April 2014

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To paraphrase Larry Summers, some people are scared – just look around. The crisis of 2007–08 took a toll on a lot of people, investors included. What seemed to be a new age of steady, moderately high growth and stable equity returns suddenly turned into the biggest economic crisis since the 1930s:

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Topics:  Economic history Financial markets

Tags:  financial markets, crisis, behaviour, risk aversion, lending

Rational learning about rare-disaster frequencies: A persistent source of asset-price overreaction

Volker Wieland, Christos Koulovatianos 01 November 2011

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Investors want to understand how asset markets work. Their perceptions of the mechanism determining asset prices are essentially forecasting models with unknown parameters. If they could have full confidence in the model’s parameters such as in a casino where unknowns have known probabilities, investment strategies and asset prices would reflect rational expectations.

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Topics:  Financial markets

Tags:  crisis, stock market volatility, rational expectations

Financial Protectionism: the First Tests

Andrew K Rose, Tomasz Wieladek,

Date Published

Mon, 05/23/2011

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Global crisis International finance

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crisis, nationalisation, bank, domestic, empirical, foreign, loan, panel and privatization

A Decade of Debt

Carmen M Reinhart, Kenneth Rogoff,

Date Published

Mon, 03/28/2011

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Macroeconomic policy

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growth, crisis, debt, default, financial repression

Will Stabilisation Limit Protectionism? The 4th GTA Report

Simon J Evenett,

Date Published

Thu, 02/18/2010

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trade, crisis, protectionism, GTA

Greece: The party is over

Charles Wyplosz 14 December 2009

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The near-run on the Greek public debt is wholly unjustified. The Greek government has no incentive to default, and no need to do so as long as financial markets do not panic. On the other hand, governments have indulged in blatant fiscal indiscipline for more than three decades. The renewed financial market pressure should be taken as a signal that the party is over. It is time for Greece to adopt two simultaneous measures:

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Topics:  Europe's nations and regions

Tags:  crisis, US current account deficit, default, Greece

Trade finance in crisis

Jean-Pierre Chauffour, Thomas Farole 05 September 2009

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By providing liquidity and security to facilitate the movement of goods and services, trade finance lies at the heart of the global trading system. Indeed, as Auboin (2009) notes, trade finance – upon which some 80-90% of world trade relies – has become ever more critical as global supply chains have increasingly integrated in recent years:

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Topics:  International trade

Tags:  crisis, Trade finance

Dumping Russia in 1998 and Lehman ten years later: Triple time-inconsistency episodes

Guillermo Calvo 31 August 2009

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In the last decade we have witnessed two major systemic financial crises, namely, the 1998 Russian crisis and the current crisis, the latter initially associated with the subprime mortgage market (henceforth, subprime crisis). A critical event in the subprime crisis was the Lehman Brothers’ episode in September 2008. Lehman’s collapse, coming on the heels of the sell-off of Bear Stearns, took the market by surprise. The ensuing about-face regarding AIG was perhaps less surprising but still added a heavy dose of policy uncertainty.

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Topics:  Macroeconomic policy

Tags:  crisis, time inconsistency, time-inconsistent plans

Should we rush to further regulate financial institutions?

Guillermo Calvo, Rudy Loo-Kung 29 June 2009

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‘Tis better to have loved and lost,
Than never to have loved at all.

Tennyson, 1850.

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Topics:  Financial markets

Tags:  growth, crisis, emerging markets, lender of last resort, financial regulation, financial market

The global financial crisis: A wake-up call for trade finance capacity building in emerging Asia

Wei Liu, Yann Duval 19 June 2009

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The current financial crisis has provided a useful reminder of how essential trade finance is to international trade. The capacity to trade is significantly affected by the availability and cost of financing and the availability of instruments to mitigate the risks associated with international trade transactions (Auboin and Meier-Ewert 2003; Thomas, 2009).1

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Topics:  International trade

Tags:  crisis, Trade finance, emerging Asia

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