Special Report on
The economics of financial innovations
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reference to financial innovation being, net-net, a bad thing. I didn’t go into too much detail, because it wasn’t all that relevant to the point at hand, and because, as Sean Matthews pointed out, this question has been debated in the blogosphere in some depth in the recent past. But Tyler Cowen picked up on the line, and wrote: I can understand that particular financial innovations might be bad, but financial innovation overall? Surely this claim was false in years 1200, 1900, and also 1950. (Of course you’ll find very harmful financial explosions between those years and the current day but still on net ...
The economics of financial innovations - Trends
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Financial innovations and their implications for monetary policy ...
This paper attempts to provide a broad and long-term perspective on recent changes in the banking system and financial markets and on their major implications for monetary policy in the larger industrial countries. The financial changes or innovations reviewed here cover a broad spectrum. Frequently, the term financial innovation is limited to new or altered financial instruments (i.e. deposit and cash management instruments) issued by banks and other deposit-taking institutions. In this paper the discussion of financial changes includes these types of innovations as well as issues of securities ...
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Regulatory innovations in the United States occur after financial crises. The Federal Reserve System grew out of the 1907 bank runs, and the Securities and Exchange Commission and the Commodity Futures Trading Commission were regulatory results of the Great Depression. Recent interventions by the Fed and the Treasury have been only stopgap measures to forestall a meltdown. The costs include the depletion of both public coffers and regulatory credibility. As in previous crises, the financial sector requires a new regulatory framework. Our current financial-crisis regulatory structure is ... Read More
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REVIEWS AND OPINIONS
Arguing for the merits of financial innovation in the aftermath of a major economic crisis is both difficult and politically incorrect. And yet, despite the damning evidence of capitalism run amuck, I strongly believe that any regulatory response that stifles financial innovation will in the long run be detrimental to economic growth, inclusion, and prosperity. A close examination of financial innovations introduced in recent decades reveals that not all of them were universally toxic, or universally beneficial. In fact, the same financial instruments have been used in both highly productive and highly destructive ways: Swaps , ...
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A decade after the Walk for Reconciliation, the Rudd Government needs to stop the spin and start paying attention to the evidence on Indigenous policy, writes Aron Paul Read the full article Indigenous Policy 24 May 2010 by Thalia Anthony The Government likes to say that the NT Intervention has improved Indigenous health - but the problem is there's no proper evidence for their claims, writes Thalia Anthony Read the full article Federal Politics 24 May 2010 by Ben Eltham Kevin Rudd has made plenty of big promises, including that he would govern by "evidence-based policy". As Ben Eltham writes, he's now ...
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SURVEY RESULTS FOR
THE ECONOMICS OF FINANCIAL INNOVATIONS
(59 percent) of banks with assets below $15 billion were using it (Federal ... financial innovations œ particularly on the credit side of the banking business. .... "The Economics of Defense Contracting: Incentives and Performance" ...
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securitization and the transfer of financial innovations are critical to this process ..... separate and equal tranches – one called Bulls and the other Bears – of FF400 million each. .... percent of the industry's assets through some 2000 branches, .... Journal of Financial Economics, 36:57-87. Doetsch, D. (1996). ...
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RELATED NEWS
My last blog post listed some policies and institutions with which
various small countries around the world have had success — innovations
that might be worthy of emulation by others. Of course there are plenty
of other examples of policies and institutions that have been tried and
that are to be avoided. The area of agricultural policy is rife with
them. Many start with a confused invoking of the need for “food
security.”The recent run-up in wheat prices is a good example. Robert Paarlberg wrote an excellent column in the Financial Times recently ,
titled “How grain markets sow the spikes they fear.” Grain ...
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WASHINGTON (MNI) - The Treasury Department, bowing to the
inevitable, confirmed Thursday it will consider the future of Fannie Mae
and Freddie Mac in the context of deep social issues, not just housing
economics. The 12 panelists for Tuesday's conference on the future of housing
finance include the head of the Urban League and the MacArthur
Foundation's head of community development policy as well as more
familiar names from within the mortgage lending industry, credit markets
expert Bill Gross from PIMCO and one economist. The list of invitees to the first major event related to what
promises to be one of the ...
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INFORMATION RESOURCES
Lerner, Josh, 2006, The new new financial thing: the origins of financial innovations,. Journal of Financial Economics 79, 233-255. Merton, Robert C., 1992, ...
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2. Links between Financial Innovation and Economic Volatility. In this section we use a simple model of the economy and some background about ...
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Jan 20, 2010 ... The main purpose of financial innovation has been not been to ... pursuing what he called —an exact economics“ œ an economics in which ...
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THE ECONOMICS OF FINANCIAL INNOVATIONS
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QUESTIONS AND ANSWERS
Automatic stabilizers are components in the government deficit which occur automatically in an economic downturn: lower economic activity decreases the tax revenue and at the same time increases the transfer payments (e.g. unemployment benefits) which lead to an overall higher government deficit. This so called non-discretionary component in government spending prevents a deflationary spiral and thus performs an important stabilizing function, because it allows the private households to save more. Given that during a recession there is a sharp increase in uncertainty and insecurity, the private sector will have the tendency to ...
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