This paper generates a typology of balance-of-payments crises under rational expectations, namely liquidity crises and solvency crises. The ex-post application of official financial rescue packages of sufficient size is a perfect cure for liquidity crises but amounts to an ineffective and costly bailout of private investors in the case of solvency crises. The anticipation of the rescue program ...

We study financial fragility, exchange rate crises, and monetary policy in an open economy version of a Diamond-Dybvig model. The banking system, the exchange rate regime, and central bank credit policy are seen as parts of a mechanism intended to maximize social welfare; if the mechanism fails, banking crises and speculative attacks become possible. We compare currency boards, fixed rates, and...

This paper evaluates the relative importance of three contagion channels: direct trade, neighborhood effects and financial competition in banking centers. Because these channels are highly correlated, they could easily be confused. However, policy implications are very different depending on the channel and therefore disentangle which channels are more relevant is an important task. This paper ...

This perspective argues that for-profit hospitals will be heavily affected by epidemic crises, including the current coronavirus disease 2019 (COVID-19) outbreak. Policy-makers should be aware that for-profit hospitals in particular are likely to face financial distress. The suspension of all non-urgent elective surgery and the relegation of market-based mechanisms that...

among the many reasons that may limit the adoption of promising reform ideas, policy capacity is the least recognized. the concept itself is not widely understood. although policy capacity is concerned with the gathering of information and the formulation of options for public action in the initial phases of policy consultation and development, it also touches on all stages of the policy proces...

This chapter has two objectives: to produce new arguments for an actual policy issue and thus demonstrate the fruitfulness of a new theory. The theory is a recently proposed generalization of Darwinism termed “evolutionary-developmental economics,” which recognizes individuals to be rational only boundedly and unequally. The issue is old, but actualized by the recent financial crises: By what g...

in the past few decades, capitalist economic system has witnessed different financial crises the most important of which is the 2008 financial crisis. the crisis had different causes that the main causes are innovations and financial assets without actual backing (real underlying asset) and their developing by financial institutions. namely, financial institutions, especially banks, developed t...