Financial Crises and What to Do About Them

Financial Crises: Causes, Consequences, and Policy Responses, edited by Stijn Claessens, M. Ayhan Kose, Luc Laeven, Fabián Valencia, provides a comprehensive overview of research into financial crises and policy lessons learned. 

The book covers a wide range of crises, including banking, balance of payments, and sovereign debt crises. It begins with an overview of the various types of crises and introduces a comprehensive database of crises. 

Broad lessons on crisis prevention and management, as well as the short-term economic effects of crises, recessions, and recoveries are discussed. 

The medium-term effects of financial crises on economic growth, as well as policy measures to prevent booms, mitigate busts, and avoid crises are analyzed. Finally, policy measures for mitigating the adverse impact of crises and ways to restructure banks, households, and sovereigns are presented. 

The collection of research in this book provides an excellent overview of critical policy areas, with valuable lessons on how countries can better monitor their economies and financial systems. Read a blog by Stijn Claessens on the issue.

IMF eLibrary   IMF bookstore  Amazon Kindle version

RePEc -- Understanding Financial Crises

New Books on China

Couple of good books on China from the IMF

China's Economy in Transition: 

From External to Internal Rebalancing

China’s current account surplus has declined to around one-quarter the peak reached before the global financial crisis. While this is a major reduction in China’s external imbalance, it has not been accompanied by a decisive shift toward consumption-based growth. Instead, the compression in its external surplus has been accomplished through increasing fixed investment so that it is now an even higher share of China’s national economy. 

This increasing reliance on fixed investment as the main driver of China’s growth raises questions about the durability of the compression in the external surplus and the sustainability of the current growth model that has had unprecedented success in lifting about 500 million people out of poverty over the last three decades. This volume examines various aspects of the rebalancing process underway in China, highlighting policy lessons for achieving stable, sustainable, and inclusive growth.

on Amazon   Google  Discussion at Carnegie

China's Road to Greater Financial Stability: 

Some Policy Perspectives

China has reached a stage where further financial sector reforms appear essential. As the reform process progresses and macrofinancial linkages deepen, the preservation of financial stability will become a major policy preoccupation. China is already working toward enhancing its surveillance and monitoring capabilities and is actively determining ways to undertake a series of reforms that would lay the foundation for a strong, sustained, and balanced growth. 

"China’s Road to Economic Stability" focuses on the key financial policy issues facing China today. The volume draws upon contributions from senior Chinese authorities and academics, as well as staff from the IMF to discuss the financial policy context within China, macroeconomic factors affecting financial stability, and the critical role of financial system oversight. It seeks to improve the understanding of the financial sector policy processes underway and the shifts taking place among China’s economic priorities. 

The book also covers issues such as the financial stability framework, systemic linkages, liquidity management, risk and vulnerability analysis, and sequencing financial reforms. The book is something of a must read for academics, researchers, and stakeholders interested in China and the shifts taking place in the manner in which China views its financial sector policies and oversees the stability of the financial system.

on Amazon   Google   Google Play

How to Handle the World's Waste

Junkyard Planet is an enjoyable and fascinating read about the multi-billion dollar global trash trade. More like a novel than a dry tome, it is full of subtle insights. 

Neither incineration nor landfill is a sustainable solution to our apparent addiction to waste, but neither is recycling always the green alternative it appears to be.

Reusing is better than recycling, and not using in the first place is best of all. While Junkyard Planet might be read as a celebration of the market, it is also critical of unbridled capitalism. For every entrepreneurial recycler, there is a product that should not be thrown away in the first place—but it is profitable for manufacturers if we do. 

Author and journalist Adam Minter, who was born into a family of scrap dealers, argues passionately that manufacturers need to make technological products that last longer and can be refitted rather than thrown away, if we are to significantly reduce our collective damage to the environment.

Read the full review in F&D magazine

Interview with Adam Minter on U.S. National Public Radio

Find on Goodreads

Review on Mother Jones

Q&A in the New York Times blog:  Part 1; Part 2

Deaton's Great Escape

The world is a better place than it used to be. People are wealthier and healthier, and live longer lives. Yet the escapes from destitution by so many have left gaping inequalities between people and between nations. In "The Great Escape," Angus Deaton--one of the foremost experts on economic development and on poverty--tells the remarkable story of how, starting 250 years ago, some parts of the world began to experience sustained progress, opening up gaps and setting the stage for today's hugely unequal world. Deaton takes an in-depth look at the historical and ongoing patterns behind the health and wealth of nations, and he addresses what needs to be done to help those left behind.Deaton describes vast innovations and wrenching setbacks: the successes of antibiotics, pest control, vaccinations, and clean water on the one hand, and disastrous famines and the HIV/AIDS epidemic on the other. He examines the United States, a nation that has prospered but is today experiencing slower growth and increasing inequality. He also considers how economic growth in India and China has improved the lives of more than a billion people. Deaton argues that international aid has been ineffective and even harmful. He suggests alternative efforts--including reforming incentives to drug companies and lifting trade restrictions--that will allow the developing world to bring about its own Great Escape.

Demonstrating how changes in health and living standards have transformed our lives, "The Great Escape" is a powerful guide to addressing the well-being of all nations. 

Deaton argues that the main barrier to progress in poor countries is not lack of resources but bad governments. Yet it is these governments that receive the aid either directly or indirectly. The flow of foreign money undermines governments’ incentives to raise money from their own taxpayers, which in turn requires growth-friendly policies and reformed institutions. Instead it shores up ill-functioning governments, the very misfortune holding back poor countries.


New York Times review

Princeton University press

The Economist

Bloomberg review

Article in F&D magazine

Riding the Digital Wave

Neat video from the IMF about their publications program:

Continuation of Policy by Other Means

Treasury’s War
The Unleashing of a New Era of Financial Warfare
PublicAffairs, New York, 2013, 336 pp., $27.99 (cloth).

Treasury’s War by Juan C. Zarate offers a guided tour of a decade of the U.S. government’s efforts to wield its financial and economic power to achieve its strategic interests and alter the balance of various conflicts. 

Juan Zarate is well positioned to tell this story: he joined the George W. Bush administration’s Treasury Department as a young, gregarious former prosecutor with antiterrorism credentials just months before the terrorist attacks of September 11, 2001, and eventually rose to become deputy national security advisor.­

Zarate was personally involved in many of the developments recounted in the book, including the “war on terror,” the U.S. invasion of Iraq, and efforts to contain the nuclear ambitions of North Korea and Iran and to undermine the Qaddafi and Assad regimes in Libya and Syria.

Following 9/11, financial and economic sanctions and the role of financial intelligence became increasingly important and effective tools in the U.S. national security arsenal. Zarate attributes this to several factors, including the globalization of financial markets and the central role played by the dollar in international trade transactions.

Read the full F&D magazine review.

Read on TheBookWoods.com 

A Forum for Central Bankers--Taking Stock of the World's Oldest IFI

Péter Ákos Bod, Professor at Corvinus University in Budapest, discusses a new book on The Bank for International Settlements (BIS). Set up in May 1930, the BIS is the world's oldest international financial organisation, and brings together central bankers from around the world.

Bod writes in the latest F&D magazine that "the BIS is an international institution that has had to assume new roles under drastically changing global conditions. 

"Collecting banking data, conducting high-quality research, and providing prudential advice are its vital contribution to the proper functioning of modern finance. 

"The common European currency and the foundation of the European Central Bank presented the BIS with new challenges, as does the growing importance of the so-called BRICS (Brazil, Russia, India, China, South Africa) and other emerging economies, whose central banks want to be heard and taken into account. The BIS will continue and prosper if it keeps reacting as innovatively and efficiently to the objective demands of international high finance as it has throughout its existence.­"