Greenspan's Conundrum and Bernanke's Nightmare

2017 ◽  
pp. 1-23
Author(s):  
Francis E. Warnock
Keyword(s):  
Financial Markets ◽  
Interest Rates ◽  
International Finance ◽  
Budget Deficit ◽  
Global Financial Crisis ◽  
Major Step ◽  
Treasury Bonds ◽  
The Global Financial Crisis ◽  
The U.S

At what point in the tepid recovery from the global financial crisis should the Fed take a major step in normalizing U.S. monetary policy by greatly reducing its holdings of U.S. Treasury bonds? Federal Reserve Board Chairman Ben Bernanke faced this question in Spring 2012, even as he was concerned that the U.S. economy was on weaker footing than many believed. Suitable for both core and elective MBA courses in global financial markets and international finance, this case examines the risks associated with a policy some would consider monetizing the budget deficit. Students consider the factors behind the current and prospective levels of U.S. long-term interest rates from Bernanke's perspective.

scholarly journals Relações entre índices preço-lucro e retornos dos títulos públicos

2020 ◽  
Vol 18 (3) ◽  
pp. 27
Author(s):  
Daniel Penido de Lima Amorim ◽  
Marcos Antônio de Camargos
Keyword(s):  
Stock Market ◽  
Interest Rates ◽  
Error Correction ◽  
Financial Market ◽  
Treasury Bonds ◽  
Error Correction Models ◽  
Distributed Lags ◽  
The U.S

<p>The ratios P/E1 and P/E10 or the cyclically adjusted price-to-earnings ratio are widely disseminated in the literature based on the U.S. stock market. This paper develops a method to construct P/E ratios for the Brazilian stock market. The purpose of this paper is to analyze the long-term relationships between both P/E1 and P/E10 and interest rates corresponding to the returns of treasury bonds, in order to test the Fed Model. In general, the period considered was from December 2004 to June 2018. Autoregressive distributed lags models were estimated, which can be represented as conditional error correction models. Results show significant long-term relationships between both P/E1 and P/E10 and the relevant interest rates, suggesting that the Fed Model is in line with the behavior of the Brazilian financial market.</p>

Conclusion

2020 ◽  
pp. 601-609
Author(s):  
Ranald C. Michie
Keyword(s):  
Financial Crisis ◽  
Interest Rates ◽  
Global Financial Crisis ◽  
Low Cost ◽  
Financial System ◽  
Central Banks ◽  
Financial Instruments ◽  
The Stability ◽  
The Global Financial Crisis

The Global Financial Crisis that took place in 2007–9 was the product of both long-term trends and a specific set of circumstances. In particular, the thirty years preceding that crisis had witnessed a refashioning of the global financial system, which was, itself, a reaction to that which had emerged after the Second World War. Over those thirty years competitive markets gradually replaced governments and central banks in determining the volume and direction of international financial flows. The interaction within and between economies took place on a daily basis through the markets for short-term credit, long-term loans, foreign exchange, securities, and a growing array of ever more complex financial instruments that allowed risks to be hedged whether in terms of interest rates, currencies, exposure to counterparties, or other variables. This was a period of great innovation as new financial instruments were created in order to match the needs of lenders for high returns, certainty, and stability and those of borrowers for low cost finance and flexibility in terms of the amount, currency, and timing of repayment. Nevertheless, governments remained heavily involved through the role played by regulators and central banks, generating confidence in the stability of the new financial system. That confidence was destroyed by the Global Financial Crisis of 2008 and had not been rebuilt by 2020.

scholarly journals Increasing Transparency in Capital Markets after the Global Financial Crisis: The Case of Turkey

2015 ◽  
Author(s):  
Cüneyd Ebrar Levent
Keyword(s):  
Financial Crisis ◽  
Financial Markets ◽  
Capital Markets ◽  
Global Financial Crisis ◽  
The United States ◽  
Wall Street ◽  
Small Investors ◽  
The Global Financial Crisis ◽  
Transparency And Disclosure

The need for financial transparency is way beyond reducing fluctuations on financial markets, the protection of small investors or fighting against money laundering. Asian crisis in 1997, Dot-com bubble in 2000, company crises such as Enron and the global financial crisis in 2008 have shown that a crisis caused by the lack of transparency in companies might not only affect the company and its stakeholders in a negative way but also the country and the region the company is in. After the financial crisis of 2008 many countries made various arrangements in capital accounts about increasing transparency and accountability which was seen as one of the reason of the crisis in addition the short and long term precautions. Dodd–Frank Wall Street Reform and Consumer Protection Act which came into force in the United States in July 2010 is one of the most significant arrangements. In this study, practices of increasing transparency in capital markets after global financial crisis have been discussed. In this context, in light of the new regulations and the Corporate Governance Principles, transparency and disclosure practices in Turkey have been examined. The results of these practices have been analyzed in the short term and its possible effects on capital markets, companies and shareholders have been discussed in the long term. Increasing transparency has been expected to help financial markets process more effectively and to provide benefits to all stakeholders.

scholarly journals Zadłużenie gospodarstw domowych a dynamika wydatków konsumpcyjnych w krajach OECD po wybuchu kryzysu finansowego

2017 ◽  
pp. 145-158
Author(s):  
Piotr Bolibok
Keyword(s):  
Economic Growth ◽  
Financial Crisis ◽  
Interest Rates ◽  
Global Financial Crisis ◽  
Disposable Income ◽  
Household Debt ◽  
Rate Of Growth ◽  
The Global Financial Crisis ◽  
The Impact

The paper aims at empirical evaluation of the impact of household debt on the dynamics of consumption spending since the beginning of the global financial crisis. The research employed linear regression analysis of the rate of growth of household spending against the rate of growth of disposable income, the level of indebtedness and long-term interest rates in the OECD member states between 2008-2014. The results obtained indicate that household indebtedness was one of the factors influencing the dynamics of consumption demand and thus the processes of economic growth in the OECD states after the beginning of the global financial crisis. Variations in the relation of total debt to net disposable income and in the level of long-term interest rates were both negatively related to the changes in consumption spending. This impact turned out to be markedly stronger when total household debt of a given country was exceeding 85% of GDP, which is consistent with the results of previous investigations on the in&uence of the indebtedness of household sector on the dynamics of economic growth

Ocena antykryzysowej polityki gospodarczej Stanów Zjednoczonych i wybranych państw członkowskich Unii Europejskiej w latach 2005–2014

2016 ◽  
pp. 26-46
Author(s):  
Marcin Jan Flotyński
Keyword(s):  
United States ◽  
European Union ◽  
Financial Markets ◽  
Global Economy ◽  
Global Financial Crisis ◽  
The United States ◽  
The European Union ◽  
High Volatility ◽  
The Global Financial Crisis ◽  
Domestic Products

The global financial crisis in 2007–2009 began a period of high volatility on the financial markets. Specifically, it caused an increased amplitude of fluctuations of the level of gross domestic products, the level of investment and consumption and exchange rates in particular countries. To address the adverse market circumstances, governments and central banks took actions in order to bolster the weakening global economy. The aim of this article is to present the anti-crisis actions in the United States and selected member states of the European Union, including Poland, and an assessment of their efficiency. The analysis conducted indicates that generally the actions taken in the United States in response to the crisis were faster and more adequate to the existing circumstances than in the European Union.

Conclusions

2017 ◽  
Author(s):  
Yilmaz Akyüz
Keyword(s):  
Monetary Policy ◽  
Financial Crisis ◽  
Interest Rates ◽  
Global Financial Crisis ◽  
Developing Economies ◽  
Quantitative Easing ◽  
Unconventional Monetary Policy ◽  
Advanced Economies ◽  
The Global Financial Crisis ◽  
Zero Bound

The preceding chapters have examined the deepened integration of emerging and developing economies (EDEs) into the international financial system in the new millennium and their changing vulnerabilities to external financial shocks. They have discussed the role that policies in advanced economies played in this process, including those that culminated in the global financial crisis and the unconventional monetary policy of zero-bound interest rates and quantitative easing adopted in response to the crisis, as well as policies in EDEs themselves....

Financial Sustainability and Infrastructure Finance

2018 ◽  
Author(s):  
Felipe Carvalho de Rezende
Keyword(s):  
Financial Institutions ◽  
Financial Stability ◽  
Global Financial Crisis ◽  
Financial Sustainability ◽  
Infrastructure Finance ◽  
Strategic Role ◽  
Development Banks ◽  
The Global Financial Crisis ◽  
Capital Development

Among the lessons that can be drawn from the global financial crisis is that private financial institutions have failed to promote the capital development of the affected economies, and to dampen financial fragility. This chapter analyses the macroeconomic role that development banks can play in this context, not only providing long-term funding necessary to promote economic development, but also fostering financial stability. The chapter discusses, in particular, the need for public financial institutions to provide support for infrastructure and sustainable development projects. It concludes that development banks play a strategic role by funding infrastructure projects in particular, and outlines the lessons for enhancing their role as catalysts for mitigating risks associated with such projects.

Financialization

2018 ◽  
pp. 276-290
Author(s):  
Ravi Roy ◽  
Thomas D. Willett
Keyword(s):  
Financial Markets ◽  
Financial Services ◽  
Capital Mobility ◽  
Global Financial Crisis ◽  
Economic Globalization ◽  
The Past ◽  
The World ◽  
The Global Financial Crisis ◽  
National Economies ◽  
Global Financial System

The size and scope of financial sectors throughout the world have grown exponentially in tandem with the rise of globalization and increased capital mobility. The terms “economic globalization” and “financialization” are often discussed as inextricably related phenomena. Although the rapid increase in the number and variety of financial services and products during the past four decades has helped spur economic growth and create wealth on an unprecedented scale, the devastating fallout from the global financial crisis of 2008–2009, and the economic turbulence that followed, demonstrates how poorly managed financial sectors can simultaneously cause enormous pain. This chapter argues that if the opportunities created by economic globalization and financialization are to be maximized, while at the same tempering volatile financial markets, then the global financial system (and the national economies connected with it) must be fundamentally restructured. A number of ways that should be taken under consideration are discussed.

Effect of economic indicators, biomass energy on human development in China

2021 ◽  
pp. 0958305X2110220
Author(s):  
Ngo Thai Hung
Keyword(s):  
Human Development ◽  
Global Financial Crisis ◽  
Trade Openness ◽  
Biomass Energy ◽  
Wavelet Coherence ◽  
Causality Test ◽  
Frequency Domains ◽  
Bidirectional Relationship ◽  
The Global Financial Crisis

Previous studies ignored the distinction between short, medium, and long term by decomposing macroeconomic variables and human development index at different time scales. We re-visit the causal association between biomass energy (BIO), economic growth (GDP), trade openness (TRO), industrialization (IND), foreign direct investment (FDI), and human development (HDI) in China on a quarterly scale by scale basis for the period 1990 to 2019 using the tools of wavelet, i.e., wavelet correlation, wavelet coherence and scale by scale Granger causality test. The main findings uncover that IND, TRO, GDP, and BIO positively drive the HDI at low and medium frequencies, while FDI negatively impacts HDI during the sample period. Additionally, there is a bidirectional relationship between GDP and HDI at different time and frequency domains. Specifically, we discover that the positive co-movement is more robust in the aftermath of the global financial crisis, particularly for HDI, BIO, GDP, and TRO at medium frequencies throughout the period under research. Our empirical insights have significant implications for achieving human development sustainability in China.

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