Week Ending 21 March 2010

WHY FINANCIAL REGULATION MUST ALSO REBUILD TRUST
Giancarlo Corsetti, Michael P. Devereux, Luigi Guiso, John Hassler, Gilles Saint-Paul, Hans-Werner Sinn, Jan-Egbert Sturm, Xavier Vives, 21 March 2010

Public distrust of bankers and financial markets has risen dramatically with the financial crisis. This column argues that this loss of trust in the financial system played a critical role in the collapse of economic activity that followed. To undo the damage, financial regulation needs to focus on restoring that trust.

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Week ending 7 March 2010

THE POLITICAL LIMITS TO GLOBALISATION
Daron Acemoglu, Pierre Yared, 7 March 2010

Is globalisation inevitable and irreversible? This column argues that globalisation is a policy choice. It examines the relationship between military expansion and international trade flows, finding that increased nationalist and militarist sentiments are negatively associated with trade. A 10% increase in military spending between 1985 and 2005 is associated with a reduction in the trade share of GDP of around 2%.

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Week Ending 28 Februrary 2010

PERSISTENCE OF BAD GOVERNMENTS
Daron Acemoglu, Georgy Egorov, Konstantin Sonin, 28 February 2010

Why do bad and incompetent governments emerge and persist under a variety of different political regimes? This column presents a new insight. Even though more democratic regimes do not necessarily perform better than less democratic ones under given conditions such as during conflicts or early economic development, more democratic regimes do appear to have greater flexibility in the face of shocks.

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Week Ending 21 February 2010

REDEMPTION OR ABSTINENCE?
Ricardo Hausmann, Ugo Panizza, 21 February 2010

Is "original sin", a situation in which the domestic currency is not used to borrow abroad or to borrow long-term even domestically, no longer a problem? This column argues that, while original sin has diminished and countries are making greater use of their domestic bond market, foreign currency debt is still too risky to be sensible.

Read article: http://www.VoxEU.org/index.php?q=node/4655

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Week Ending 13 February 2010

ELEVEN LESSONS FROM ICELAND
Thorvaldur Gylfason, 13 February 2010

How to stop a repeat of Iceland's crisis – both in the country and elsewhere? This column provides eleven lessons covering asymmetric information, moral hazard, better warning systems and improved regulation, preventing banks becoming "too big to fail" and restricting asset bubbles, holding creators of externalities to account, and providing safeguards on political interference.

Read article: http://www.VoxEU.org/index.php?q=node/4612

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Week Ending 7 February 2010

TAX BANKS TO DISCOURAGE SYSTEMIC-RISK CREATION, NOT TO FUND BAILOUTS
Enrico Perotti, 7 February 2010

Obama's plans for bank taxation took markets, policymakers, and academics by surprise, leaving all parties now debating its merits. This column suggests an alternative. By raising a Pigouvian tax based on banks' individual contribution to systemic-risk creation, the policy would target the externality caused by funding fragility while raising the cost of opportunistic risk creation in good times.

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Week Ending 30 January 2010

HAPPY PEASANTS AND MISERABLE MILLIONAIRES
Carol Graham, 30 January 2010

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Week Ending 24 January 2010

MAKING SENSE OF OBAMA'S BANK REFORM PLANS
Viral Acharya, Matthew Richardson, 24 January 2010

Obama's sweeping proposal for financial regulation took the world by surprise. Here two of the world's leading professors of finance explain why it is step in the right direction from the standpoint of addressing systemic risk. They also point out a number of drawbacks that should be fixed.

Read article: http://www.VoxEU.org/index.php?q=node/4521

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Week Ending 16 January 2010

DOES THE GREAT RECESSION REALLY MEAN THE END OF THE GREAT MODERATION?
Olivier Coibion, Yuriy Gorodnichenko, 16 January 2010

Was the Great Moderation "something of a fluke"? This column argues that good monetary policy did play a role in taming inflation. It argues that the current recession, while clearly severe by historical standards, does not seem to imply a return to the levels of volatility observed in the 1970s.

Read article: http://www.VoxEU.org/index.php?q=node/4496

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