Carmen Reinhart, 15 March 2008

We may just have started to feel the pain. Asset price drops – including housing – are common markers in all the big banking crises over the past 30 years. GDP declines after such crises were both large (-2% on average) and protracted (2 years to return to trend); in the 5 biggest crises, the numbers were -5% and 3 years. This column, based on the author’s testimony to the Congress, picks through the causes and consequences. It argues that when it comes to ‘cures,’ it would be far better to get the job done right than get the job done quickly.

Willem Buiter, 13 March 2008

Loan defaults create financial losers and winners, but the losses are highly concentrated in highly visible financial institutions while the winners are dispersed among millions of mortgage-holders that have been written down or written off. Here is a discussion how the subprime crisis has created winners and what it means for analysis of this unfolding situation.

Giovanni Dell'Ariccia, Luc Laeven, Deniz Igan, 04 February 2008

Recent US mortgage market troubles unsteadied the global economy. This column summarises research analysing millions of loan applications to investigate the roots of the crisis. A credit boom may be to blame.

Richard Portes, 22 January 2008

Recent financial market troubles highlight a number of problems with the credit ratings agencies. This column argues only a few of the proposed policy solutions are likely to be both feasible and helpful.

Willem Buiter, 19 December 2007

What caused the current North Atlantic financial crisis, how can it be fixed and how can the likelihood of future crises be reduced? CEPR Policy Insight No. 18 addresses these issues at length.

Willem Buiter, 19 December 2007

What caused the current North Atlantic financial crisis, how can it be fixed and how can the likelihood of future crises be reduced? This column introduces a new CEPR Policy Insight, 'Lessons from the 2007 Financial Crisis', which addresses these issues at length.

Michael Bordo, 17 December 2007

There is a strong tendency in the media and policy circles to view each crisis as totally new and unexpected. Financial crises, however, are as old as financial markets. Here are the lessons drawn by one of the world’s leading economic historians of financial crises.

Stephen Cecchetti, 16 December 2007

The financial crisis of 2007 is bringing out the creative side of the worlds central bankers. Finding traditional instruments wanting, they spent the last month or so fashioning new tools and resurrecting old ones. Here are the FAQs on what they did, why and what it might mean.

Stephen Cecchetti, 03 December 2007

The final essay examines whether central bank actions have created moral hazard, encouraging asset managers to take on more risk than is in society’s interest; the answer is “no”.

Stephen Cecchetti, 30 November 2007

The third essay in this 4-part series argues that central banks should have a direct role in financial supervision.

Stephen Cecchetti, 28 November 2007

The second essay in this 4-part series discusses the lesson from the Bank of England’s recent experience, arguing that a lender of last resort is no substitute for a well-designed deposit insurance mechanism.

Stephen Cecchetti, 26 November 2007

Here is the first in a series of 4 essays exploring the lessons from the subprime turmoil. It sets the stage for the series, arguing that financial crises are intrinsic to the modern economy, but both individuals and governments should make adjustments to reduce the frequency of financial crises and their impact on the broader economy.

Charles Calomiris, 23 November 2007

The Subprime troubles caused a liquidity shock, but there is little reason to believe that a substantial decline in credit supply under the current circumstances will magnify the shocks and turn them into a recession. We have not (yet) arrived at a Minsky moment.

Stephen Cecchetti, 18 November 2007

To reduce the chances of another subprime-like crisis without stifling innovation, financial market regulators should work to increase standardization of securities, especially derivate instruments, and encourage their trade on organised exchanges.

Roger Ferguson, Philipp Hartmann, Fabio Panetta, Richard Portes, 15 November 2007

The ninth CEPR/ICMB Geneva Report on the World Economy examines the main threats to international financial stability, focusing on the implications of the major changes that have occurred in the global financial system in the past two decades.

Richard Portes, 15 November 2007

The global financial system shows signs of stress – turmoil, not a systemic financial crisis. Risk is being repriced and the unwinding will take some time. Now is the time to think carefully about longer-term reforms needed to improve the stability of the international financial system.

Paul De Grauwe, 14 November 2007

Inflation targeting proponents view central banks’ responsibilities as minimalist. But the subprime crisis shows that central banks cannot avoid taking responsibilities that include the prevention of bubbles and the supervision of all institutions that are in the business of creating credit and liquidity.

Alberto Giovannini, Luigi Spaventa, 05 November 2007

The Basel Committee on Banking Supervision and the Basel II framework were intended to mitigate or prevent crises like the subprime mess. The valuation practices and market transparency recommended by the Committee fall short of what is needed.

Axel Leijonhufvud, 26 October 2007

The trouble with inflation targeting in present circumstances is that constant inflation gives you no information about whether your monetary policy has hit the Wicksellian 'natural rate'. Inflation targeting might mislead us into pursuing a policy that is actively damaging to financial stability.

Axel Leijonhufvud, 26 October 2007

Here's some deep thinking on the linkages between monetary policy and financial instability. The trouble with inflation targeting in present circumstances is that constant inflation gives you no information about whether your monetary policy has hit the Wicksellian ‘natural rate’. Inflation targeting might mislead us into pursuing a policy that is actively damaging to financial stability.

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