The need for effective safety nets and social security has been highlighted by the recent crisis in East-Asia. In other parts of the developing world or in transition economies, the large economic fluctuations, climatic shocks and natural disasters also demand further development of support systems during crises. In this paper, we discuss the role played by self-insurance (via savings) in the p...

Our paper offers a minimalist model of a run on a financial market. The prime ingredient is that each investor fears having to liquidate after a run, but before prices can recover back to fundamental values. During the run, only the market-making sector is willing to absorb shares. To avoid having to possibly liquidate shares at the marginal post-run price—in which case the market-making sector...

An accurate quantitative definition of financial crisis requires a universal and robust scale for measuring market shocks. Following Zumbach et al. (2000) and Maillet et Michel (2003), we propose a new quantitative measure of financial disturbances, which captures the heterogeneity of investor horizons – from day traders to pension funds. The indicator resides on a multi-resolution analysis of ...

Our paper offers a minimalist model of a run on a financial market. The prime ingredient is that each risk-neutral investor fears having to liquidate after a run, but before prices can recover back to fundamental values. During the run, only the risk-averse market-making sector is willing to absorb shares. To avoid having to possibly liquidate shares at themarginal post-run price—in which case ...

Abstract Financial crises and currency instabilities within developing and emerging economies during the last decade had a tremendous impact on the economic performance and increased vulnerability of economies against domestic and foreign shocks. The timing of capital liberalization is one of the significant debates among other issues related to currency instability, and it would be more conven...

A global Slowdown, rising oil prices, and monetary tightening in industrial countries may lead to net capital outflows which accentuate high ratios of short-term to total external debt. This paper focuses on finding consistent indicators of financial instability. Knowledge of these indicators should assist attempts to implement institutional financial reform and improve an economy's resilien...

How long do constitutional systems persist and what explains their demise? This paper introduces a new set of data on the chronology and content of constitutions that facilitates a test of expectations about constitutional mortality and its associated risk factors. We develop a theory of constitutional longevity, in which executive ambition poses a principal threat to the constitutional order. ...

In recent years, African countries have demonstrated renewed commitment to industrialization as part of a broader agenda to diversify their economies, build resilience to shocks, develop productive capacity for high and sustained economic growth, create employment opportunities and substantially reduce poverty. The renewed commitment to promoting industrial development in Africa is timely. Afri...

This paper examines the extent to which consumption in Russian households responds to exogenous income shocks. During the time period studied in this paper (1994 – 1998), Russia experienced two major economic crises. Both featured extreme movements in the real ruble-dollar exchange rate. The price of oil, which is typically thought to have a strong effect on the Russian economy, was also quite ...