The news from Europe is scarcely getting better. Germany and the rest of the EU are locked in a battle about how to introduce a banking union and mechanisms not only to end ‘too big to fail’ but also to provide funds for future bailouts, if necessary. Indeed, in an about face, we have moved from relying on bailouts to deal with financial crises to bail-ins. The recent Cyprus episode has contributed to further damaging everyone’s reputation, including the IMF, a partner in the process, and revealed the EU’s continued inability to offer credible and consistent policies.
Domenico Lombardi, director of CIGI's Global Economy program, comments on U.S. Treasury official Mark Sobel's role in pushing the G20 to "stimulate demand and refrain from imposing fiscal austerity too quickly."
Short-selling Bans and Institutional Investors' Herding Behaviour: Evidence from the Global Financial Crisis
The authors examine bans on selected financial stocks in six countries during the 2008-2009 global financial crisis, which provided a setting to analyze the impact of short-sale restrictions. In particular, the authors focussed on short-sale constraints’ effect on institutional investors’ trading behaviour and the possibility of generating herding behaviour. They conclude that the empirical evidence shows that short-selling restrictions exhibit either no influence on herding formation or induce adverse herding.
While most people are oblivious to it, there is a war raging in the blogosphere over the role of macroeconomic stabilization policy in the current global conjuncture. The battle pits the illuminati of the economics profession (and sadly — pathetically — a well-known Harvard history professor) against each other in internecine debates over basic economic models and “what Keynes really meant” when he reflected on the human condition.
“How he navigates between understanding the needs of the corporate sector and the job of monetary policy is not going to be easy,” says CIGI Senior Fellow Pierre Siklos, commenting on the appointment of Stephen Poloz as the next governor of the Bank of Canada.
It is now almost three years ago since Greece’s government announced an austerity package that promised to reduce a budget deficit that was at least 4 times larger than the then agreed to limit under the Stability and Growth Pact. A promise was made to reduce the deficit to the requisite 3% threshold by 2012. We all know that such a promise could not be kept and deficits will no doubt exceed the wished for EU maximum for several years to come. Meanwhile, new austerity measures continue to be introduced.
At the recent Spring Meetings of the International Monetary Fund (IMF) and the World Bank, the IMF outlined what it called “Steps to Energize Global Recovery.” These were generally met with skepticism, as many observers pointed to a global “stalemate” that is preventing the implementation of the international policy framework needed to address the remaining challenges from the global financial crisis. To get a better understanding of the situation and of the related discussions at the IMF meetings, we talk to Domenico Lombardi, director of CIGI’s Global Economy Program and a former member of the IMF executive board.
At the recent G20 meeting, policy makers turned a blind eye to Japanese monetary easing and its impact on the yen exchange rate. In the meantime, Japan’s Finance Minister, Taro Aso, writing in the Financial Times, heralded his government’s attempt to reverse ‘stagnation’ and end the deflation that current Japanese policy makers believe is the source of all their ills. There is, of course, some recognition that the problems facing Japan are fundamentally structural in nature.
CIGI) and the Institute for New Economic Thinking (INET) are accepting research proposals for their joint 2013 Grant Program, with grants ranging in value from $25,000 to $250,000. This will be the fifth cycle of research grants to be issued under the program. To date, the organizations have awarded more than $20 million in grants since the program’s initial 2010 round.