To What Extent are Financial Crises Comparable and Thus Predictable?

Are financial crashes predictable?

– We critically review recent claims that financial crashes can be predicted using the idea of log-periodic oscillations or by other methods inspired by the physics of critical phenomena. In particular, the October 1997 “correction” does not appear to be the accumulation point of a geometric series of local minima. It is rather tempting to see financial crashes as the analogue of critical point...

To What Extent Vital Signs Are Important to Medical Toxicologists When Conflicts Arise in Defining Toxidroms

Appendix to "Financial Crises and Political Crises"

PBE Type i: Neither default nor political crisis If V ≤ χL, the costs of default are always larger than the costs of servicing the debt even for the benevolent government. Then in equilibrium, the government proposes to service the debt, which is accepted by the representative agent. Hence the debt is repaid and political crisis is avoided. Neither the benevolent government nor the self interes...

Financial Crises and Political Crises∗

The simultaneous determination of financial default and political crises is studied in an open economy model. Political crises accompany default in equilibrium because of an information transmission conflict between the government and the public. Multiple equilibria are possible: if foreign lenders are pessimistic about the country’s stability, they demand a high interest on the debt, exacerbat...

Comment on " Are Financial Crashes Predictable? "

In a recent paper published in this journal, Laloux et al. [1] criticized the use of eq. p (t) = A + B (t c − t) β + C (t c − t) β cos (ω ln (t c − t) − φ) (1) as a predictive tool for the detection of periods of large declines in the financial markets as first suggested in [2]. The criticism was based on a rather primitive " eye-balling analysis " lacking the consistent methodology used in the...