Crisisdummy jt = 0 otherwise. (3) This dummy variable serves to systematically distinguish those periods experiencing significant pressures on its exchange rate system which we will denote as crisis periods. To see how this dummy variable performs in practice Table 3 identifies the years singled out as crisis periods for the countries in our sample. In the case of Mexico, for example, this methodology picks up the well recorded 1982 and 1994-95 currencycrises. In addition, it also identifies 1985- 1987 and 1998 as crisis or “stressful” periods. An examination of the economic history of Mexico reveals that during the 1985-1987 period, Mexico was in intense negotiations with respect to rescheduling debt and it was unclear how those negotiations would unfold. In 1998, contagion from the Russian ruble collapse was thought to be responsible for the serious “jitters” felt through-out Latin American markets, including Mexico (Dillion, 1998). Thus, we argue that the EMP methodology allows us a systematic avenue by which we can identify “stressful” periods with respect to the exchange rate system 9 .
This paper explores the determinants and characteristics of currencycrises in Argentina throughout 118 years of history. Taken the 19 crises dated by Cerro and Meloni (2004) as a group, the graphic analyses favor the predictions of the first generation model of currency crisis. In fact, the observed behavior of Real Public Expenditure, Fiscal Deficit, the Rate of growth of International Reserves and Excess Real M1 coincide with the ones expected from the Krugman model. However, the behaviors of the other variables analyzed suggest that some factors associated to second-generation models like the overvaluation of the domestic currency, and the fall in GDP and exports before crises were also important. Likewise, the expansion of Money Multiplier M2 and the precedence of Banking Crisis to currencycrises speak about the presence of variables related to third-generation model. Similarly, the behavior of LIBOR and the reversion in the current account supports the sudden stop theory. The logit estimation confirmed that domestic macroeconomic effects, measured by GDP Growth and Real M3 Growth, and Public Expenditure Growth were very strong. An appreciati on of the currency (lagged once) increases the probability of crisis and impairing of external conditions also make a crisis more probable.
Over the last four decades developing countries have experienced much wider income fluctuations than developed countries, with periods of sustained growth accelerations being followed by deep recessions. The macroeconomic research agenda has devoted particular attention to identifying the sources of the higher volatility of emerging coun- tries for a number of reasons. First, output volatility has a negative effect on growth, arguably because uncertainty about future economic prospects discourages investment and capital inflows (Ramey and Ramey (1995)). Second, a highly volatile economy generates substantial welfare costs that add on the negative impact on growth, as cycli- cal output fluctuations and extreme output events or crises raise both the time-series volatility of aggregate consumption, particularly in less financially developed and inte- grated countries (e.g. Pallage and Robe (2003)), and the cross-sectional distribution of consumption within the economy or inequality (e.g. Calderon and Yeyati (2009)). The conventional view justifies the higher volatility of developing countries emphasizing both their large reliance on few commodities exports and foreign capital inflows, which exposes them to external demand shocks and changes in market sentiments, and on their lack of strong political and legal institutions, which play a crucial role in the evolution of the initial adverse shock into sovereign debt crises, banking crises and currencycrises.
For balance-of-payments (BOP) crises we use another measure developed by Abiad (2010): international capital financial liberalization. Greater obstacles to capital removal can prevent speculative attacks on the currency, which form the basis of certain models of currency crisis (e.g. Krugman, 1979). There is less agreement on the determinants of currency than for other types of crisis because empirical economists can draw possible instruments from three distinct generations of currency crisis models since the late 1970s (Crespo-Cuaresma & Slacik, 2009; Burnside, Eichenbaum & Rebelo, 2007): one type originating in a fiscal deficit, one in segniorage for bank-bailouts and another in bank imbalances because of foreign currency borrowing/lending risk. We try to draw instruments that capture features of these models: Short-term debt over reserves (a liquidity explanation of currencycrises) and changes in net foreign assets over GDP (to capture flight of domestic assets). We also use the M2 multiplier (Kaminsky & Reinhart, 1999) and growth
These three elements gave rise to the following stylized cyclical dynamics. The combination of credibly fixed (or predetermined) exchange rate and capital account liberalization generated important arbitrage opportunities by exploiting significant spreads between the yields of foreign and domestic assets. Capital inflows expanded liquidity and credit in the economy and fed bubbles in financial and real assets. As a result, output and employment growth accelerated. The expansion of aggregate demand led to non-tradable price increases, which under fixed (or predetermined) exchange rate regimes provoked an appreciation of the real exchange rate. The real appreciation trend reinforced capital inflows seeking to obtain capital gains by holding domestic assets. This in turn feeds back into the real economy, accelerating the expansion of credit and output growth. In this context, domestic agents’ financial positions became increasingly fragile (in Minsky’s sense). Simultaneously, the combined effect of the real exchange rate appreciation and economic growth stimulated the demand for imports, while exports tended to weaken. The worsening of the trade balance together with the increase in the interest and dividend payments turned the current account into deficit. A steady increase in current account deficit was typically observed. Since, initially, capital inflows were higher than the absolute value of current account deficits, foreign exchange reserves accumulated during the booming phase in the emerging market economies. At some point, however, current account deficit became larger than capital inflows, turning negative the balance of payments result and inducing a contraction of liquidity and credit in an already fragile financial system. This is the beginning of the contracting phase. Asset prices bubbles gradually began to deflate and episodes of illiquidity and insolvency emerged, first as isolated cases and then as a systemic financial crisis. In the case of emerging market economies, financial tensions or even crises tended to precede currencycrises.
During the first half of the 1970s, Argentina, Chile and Uruguay had suffered severe economic and political crises that derived in persistently high inflation rates. The military coups that took power immediately afterwards tried to take advantage of the international financial conditions to induce radical changes in the economic structures and fight inflation at the same time. As mentioned above, the Southern Cone programs include the liberalization of the domestic financial systems, the reduction of taxes on trade and of fiscal imbalances and opening of the capital account of the balance of payments. In the second half of the 1970s, all three countries also oriented their exchange rate policies towards stabilizing prices, adopting active crawling peg regimes. The so-called tablitas were schedules of pre-announced rates of devaluation, which were meant to function as nominal anchors for inflation. In all three cases, the private sector was the main recipient of external credits. The experiences led to substantial real exchange rate (RER) appreciation and a rapid increase in current account deficits and foreign debts. In all three cases, the experiences ended up with massive financial and currencycrises.
In turn, Illing and Liu (2003) follow a different approach and a quite different set of variables to propose a composite Index of Financial Stress for Canada. The authors followed an approach that very much resembles the usual procedures in the early warning literature. First, they establish a ranking of stressful events for the Canadian financial system through an internal Bank of Canada survey. Then, they use this ranking to condition the choice of variables and to evaluate their ability to reflect the responses to the survey regarding highly stressful financial events. In this case, The variables included in the index were daily measures of relative equity-return volatility, banking sector bond yield spread, corporate bond risk, covered interest rate spread, inverted yield curve, undervalued currency, equity-risk premium and commercial paper spread and were combined under alternative weighting schemes.
My basic questions in the European context are: how were ‘excessive/non sustainable’ external debt ratios produced in the various countries? Were the crises due to government budget deficits/government dissaving or to the private investment less private saving? What is the mechanism whereby the actions of the public and private sectors lead to an unsustainable debt bur- den, defined as an unsustainable ratio of debt ser- vice/GDP? The answers determine to a large extent how one should evaluate proposals for economic reform, to avert future crises.
Conversely, while economic crises may have mental health effects, mental health problems have increasingly significant economic effects. The economic consequences of mental health problems – mainly in the form of lost productivity – are estimated to average 3– 4% of gross national product in European Union (EU) countries (4). Because severe mental disorders often start in adolescence or young adulthood, the loss of productivity can be long-lasting. Mental disorders account for more than one third of the years lived with disability in the WHO European Region (Fig. 1).
Três séries de índices de segurança do ali- mento foram construídas, uma série para cada tipo de carne, seguindo o que fizeram Piggott e Marsh (2004) 14 . Utiliza-se o acervo on-line da Folha de São Paulo (2012) por ser, na época da pesquisa, o único acervo de jornal brasileiro de circulação nacional inteiramente e gratuitamente disponível na internet. As buscas foram realiza- das de modo que os artigos sobre problemas e crises de segurança do alimento fossem, separa- damente, contabilizados para cada tipo de carne. As buscas foram efetuadas inserindo-se, indi- vidualmente, no campo “com todas as palavras” do formulário de consulta (vide Figura 2), cada uma das seguintes palavras-chave: segurança ali- mentar, contaminação, recall de produtos ou recall ou recolha de produtos, surto, Salmonella, Listeria, E. coli, triquinose, estafilococos ou staphylococcus e intoxica- ção alimentar. Essas palavras-chaves são as mes- mas utilizadas por Piggott e Marsh (2004), mas traduzidas para o português com o uso da fer- ramenta Google Tradutor disponível em https:// translate.google.com/ e o sítio web www.wikipe- dia.org, sendo que os nomes científicos em latim não foram traduzidos (vide Tabela 1 para mais detalhes).
Is it realistic to think of international monetary reform along the lines, pioneered by EMU, of a single currency for the world? I myself doubt it. The single-currency option adopted by the European Union was a gamble that happened to pay dividends at a time when members of the European Union were and still are considering closer political integration. But in the absence of closer political integration, a single-currency monetary union, requiring that national currencies be given up, would probably not be successful on the world stage. Quite apart from the preferences of smaller countries, the United States is not likely to be willing to give up the most successful currency of the 20 th century, and the rest of the world is not going to be content with the dollar as its world currency. Nor would the countries of the euro area be willing to scrap their new currency after decades of negotiations to bring it into being, which in any case they want partly for political reasons. And if Americans and Europeans keep their currencies, the Japanese will not be willing to give up the yen. A single currency monetary union is not feasible in the present world and could not be negotiated in the absence of greater political integration.
The following analysis focuses on global minimum variance portfolios (GMV), always from the perspective of emerging- market-based investors, considering as eligible asset classes for each country a local equity portfolio (represented by the local MSCI index, in local currency), a hedged global portfolio and an unhedged global portfolio (represented, as before, by the MSCI All Country World Investment Free index). No times- series is available for forward exchange rates, so the assumption is that, in order to hedge, the investor sells dollar deposits and with the proceeds buys local currency deposits. The method- ology of estimating minimum variance portfolios has two advantages. First, it considers how exchange rate variations correlate with local and global stock markets. Second, it does not require expected return estimates. Given the above discussion, if (for example) the minimum variance portfolio does not include currency hedged global equity, the conclusion is that hedging should be used only to increase expected returns. Kempf and Memmel (2003) propose a simple way of estimating GMV portfolio weights using OLS regressions. These authors' estimation approach applied to this case is the following. The return on the portfolio will be:
No que concerne a inconvenientes podemos enumerar dois. Por um lado, um simples facto pode-se transformar num acontecimento de noto- riedade inusitada; e por outro lado, muitos assuntos (issues) são criados com base em rumores concebidos em fóruns (Orduña, 2004). Para mi- nimizar estas situações, os social media podem funcionar como forma de monitorização do ambiente que rodeia a organização e de deteção de pro- blemas ou falhas. A monitorização do ambiente e daquilo que se passa na internet deve ser uma das responsabilidades da comunicação estratégica e dos gestores de crises, no sentido de controlar as menções que são feitas à organização, assim como evitar a criação e disseminação de rumores.
A qualidade dos riscos presentes em uma determinada crise psíquica dizem da necessidade que uma pessoa tem de um ambiente de cuidado e de mecanismos específicos que esse ambiente precisa oferecer. Por exemplo, se ela planeja o suicídio ou foi demitida do trabalho e está sem moradia, ou se ela ameaçou de morte os colegas da escola, os riscos de morte ou a condição de vulnerabilidade social dizem de cuidados específicos que devem ser tomados, com o fator tempo (urgência) em questão. O bebê chorando precisa de alguém que saiba o que ele pode comer, onde vai dormir, como trocar suas fraldas; não há como dizer que o próprio bebê sabe do que necessita e onde buscá-lo. A diferença é que, no caso do adulto em crise, estamos confrontados com as necessidades de alguém desamparado e dependente, mas com potência muscular, sexual e social de adulto. As consequências, imaginadas, atuadas ou experimentadas, de sua condição de regressão à dependência são muito diferentes do que se passa com um bebê. O perigo em uma situação de regressão à dependência, isto é, quando um ambiente tenta preparar-se para cuidar de um adulto em crise psicótica, ocorre quando o ambiente não é capaz de sustentar a dependência. Assim como seria absurdo dizer que um bebê é perigoso por ser frágil, também quando falamos de crises psíquicas é a impossibilidade de cuidado que gera o risco de vida e não o desamparo em si.
Defining a financial crisis is a tricky matter. As in any industry, situations of distress in which some individual firms have difficulties in meeting regulatory requirements, or are even closed, can occur at times without being automatically la belled as a large-scale crisis prone to disrupt the normal working of the economy. 2 Therefore, letting aside the arbitrariness of any precise definition, for the goal of this chapter, a systemic crisis is an event characterized by one or more of the following: massive withdrawals of deposits, deposit freezes, fiscal measures of any sort directed at rescuing banking sector stakeholders, or where banks’ balance sheets are put under considerable strain. For practical purposes, we have employed, unless specified otherwise, the financial crises database assembled by Caprio and Klingebiel (2003), who define a systemic financial crisis as a case in which much or all of bank capital is exhausted.
O debate a cerca dos fatores que culminaram nas crises atuais vem sendo amplamente discutido, tanto em meio acadêmico como pelos meios de comunicação, todavia, ainda não há um consenso. Este capítulo tem como objetivo, portanto, discutir os principais tópicos apontados pelos economistas como causas das referidas crises. Para isso, serão realizadas três seções, em que a primeira faz uma breve retrospectiva sobre o desenvolvimento do sistema financeiro internacional, denominador comum em ambas as crises, especialmente por ser o canal de contágio da crise norte-americana para a zona do euro; em seguida, será abordada a crise norte-americana e os fatores intrínsecos à sua economia que cooperaram para a crise; e por fim, serão debatidos os problemas de âmbito institucional da zona do euro e sua influência no desenrolar da crise na região.