The financial crisis brought with it many challenges, both to prevailing disciplinary tenets, and for research and policy more generally. This column outlines the lessons that can be drawn from the financial crisis – issues like financial market failures, macro-prudential policy, structural changes of the financial system, and the European banking union. It argues for the inclusion of these topics in curricula for the next generation of finance students.
In Britain today, a majority of those in poverty live in working, rather than non-working, households. This challenges the long-held notion that paid work offers a route out of poverty. This column argues that structural changes in the labour market have brought about profound changes in the social security system. A failure to acknowledge these underlying changes means that dialogues about the political direction of the British economy can be problematic and potentially misleading.
The events of recent years have made it all too clear that we need to better understand the links between the financial sector and the real economy. This column explores financial sector shocks and real economy shocks and presents new evidence suggesting that financial shocks are a significant source of macroeconomic fluctuations. Policymakers need to better take into account the role of the financial system when predicting the future and when readying remedies.
Rich US retirees are known to spend their last years living it up in retirement hubs such as Florida. This column presents new evidence from the US suggesting that, in fact, those with high incomes run down their assets more slowly than implied by the basic life cycle model. Uncertainty over when they’re going to die and the possibility of high medical expenses – along with altruism and bequest motives – are important in understanding their low rate of spending.
Home bias in banks’ holdings of domestic government debt could pose problems for financial stability and crisis management. This column discusses some of the determinants of this bias. Factors that increase macroeconomic instability are associated with higher home bias, while better investment opportunities in the private sector and better institutional quality reduce home bias.
Other Recent Columns:
- Currency is not destiny
- The market economy’s stability
- The corporate debt bias and the cost of banking crises
- Greece is solvent but illiquid: Policy implications
- The meaning of a referendum: Austerity and sovereignty
- Firm types and jobs creation in developing countries
- Mental health stigma
- First-day criminal recidivism
- Stock prices and high-frequency news analytics
- Cross-border acquisitions and labour regulations
- Procyclical emerging market policy: New evidence
- Japan and the Great Divergence, 725 to 1874
- Path to Grexit tragedy paved by political incompetence
- Greece can still avoid a catastrophic exit from the Eurozone
- Studying economic research in Europe: The COEURE project
- Sources of stock-market fluctuations: New evidence
- How do Japanese exporters manage their exchange rate exposure?
- Grexit: The staggering cost of central bank dependence
- Explaining the black-white wage gap
- Greece – the day after: Time for a fresh start