29,904 research outputs found

    The Greek Debt Crisis: Likely Causes, Mechanics and Outcomes

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    We use insights from the literature on currency crises to offer an analytical treatment of the crisis in the market for Greek government bonds. We argue that the crisis itself and its escalating nature are very likely to be the result of: (a) steady deterioration of Greek macroeconomic fundamentals over 2001-2009 to levels inconsistent with long-term EMU participation; and (b) a double shift in markets’ expectations, from a regime of credible commitment to future EMU participation under an implicit EMU/German guarantee of Greek fiscal liabilities, to a regime of non-credible EMU commitment without fiscal guarantees, respectively occurring in November 2009 and February/March 2010. We argue that the risk of contagion to other periphery EMU countries is significant; and that without extensive structural reforms the sustainability of the EMU is in question.currency crises, bonds market, expectations, fiscal guarantees, contagion

    One for all, all for one---von Neumann, Wald, Rawls, and Pareto

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    Applications of the maximin criterion extend beyond economics to statistics, computer science, politics, and operations research. However, the maximin criterion---be it von Neumann's, Wald's, or Rawls'---draws fierce criticism due to its extremely pessimistic stance. I propose a novel concept, dubbed the optimin criterion, which is based on (Pareto) optimizing the worst-case payoffs of tacit agreements. The optimin criterion generalizes and unifies results in various fields: It not only coincides with (i) Wald's statistical decision-making criterion when Nature is antagonistic, (ii) the core in cooperative games when the core is nonempty, though it exists even if the core is empty, but it also generalizes (iii) Nash equilibrium in nn-person constant-sum games, (iv) stable matchings in matching models, and (v) competitive equilibrium in the Arrow-Debreu economy. Moreover, every Nash equilibrium satisfies the optimin criterion in an auxiliary game

    Origins and Resolution of Financial Crises; Lessons from the Current and Northern European Crises

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    Since July 2007 the world economy has experienced a severe financial crisis originating in the U.S. housing market. The crisis has subsequently spread to the financial sectors in European and Asian economies and led to a severe worldwide recession. The existing literature on financial crises rarely distinguish between factors that create the original strain on the financial sector and factors that explain why these strains lead to system-wide contagion and a possible credit crunch. Most of the literature on financial crises refers to factors that cause an original disruption in the financial system. We argue that a financial crisis with its contagion within the system is caused by failures of legal, regulatory and political institutions. One policy implication of our view is that the need for various forms of rescues of financial firms in times of crises would be reduced if appropriate institutions could be put in place Lacking appropriate institutions to avoid contagion within the financial system and a potential credit crunch, ad hoc financial crisis management is required. We draw on experiences from the financial crises in the Nordic countries at the end of the 1980s and the beginning of the 1990s. In particular, the Swedish model for crisis resolution, which has received attention during the current crisis, is discussed in order to illustrate the problems policy makers face in a financial crisis without appropriate institutions. Current European Union approaches to the crisis are discussed before turning to policy implications from an emerging market perspective in the current crisis.Financial Crisis; Institutional Failure; Insolvency Procedures; Contagion; Systemic Effects; Macroeconomic Shock; Financial Crisis Management; Swedish Model

    Behavioral Economics: Past, Present, Future

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    Behavioral economics increases the explanatory power of economics by providing it with more realistic psychological foundations. This book consists of representative recent articles in behavioral economics. This chapter is intended to provide an introduction to the approach and methods of behavioral economics, and to some of its major findings, applications, and promising new directions. It also seeks to fill some unavoidable gaps in the chapters’ coverage of topics

    Group-Oriented Fair Exchange of Signatures

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    In an Optimistic Fair Exchange (OFE) for digital signatures, two parties exchange their signatures fairly without requiring any online trusted third party. The third party is only involved when a dispute occurs. In all the previous work, OFE has been considered only in a setting where both of the communicating parties are individuals. There is little work discussing about the fair exchange between two \emph{groups} of users, though we can see that this is actually a common scenario in actual OFE applications. In this paper, we introduce a new variant of OFE, called \emph{Group-Oriented Optimistic Fair Exchange} (GOFE). A GOFE allows two users from two different groups to exchange signatures on behalf of their groups in a fair and anonymous manner. Although GOFE may be considered as a fair exchange for group signatures, it might be inefficient if it is constructed generically from a group signature scheme. Instead, we show that GOFE is \emph{backward compatible} to the Ambiguous OFE (AOFE). Also, we propose an efficient and concrete construction of GOFE, and prove its security under the security models we propose in this model. The security of the scheme relies on the decision linear assumption and strong Diffie-Hellman assumption under the random oracle model

    The Pragmatic Court: Reinterpreting the Supreme People’s Court of China

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    This Article examines the institutional motivations that underlie several major developments in the Supreme People\u27s Court of China\u27s recent policy-making. Since 2007, the SPC has sent off a collection of policy signals that escapes sweeping ideological labeling: it has publically embraced a populist view of legal reform by encouraging the use of mediation in dispute resolution and popular participation in judicial policy-making, while continuing to advocate legal professionalization as a long-term policy objective. It has also eagerly attempted to enhance its own institutional competence by promoting judicial efficiency, simplifying key areas of civil law, and expanding its control over lower court adjudication. This Article argues that the strongest institutional motivation underlying this complex pattern of activity is, contrary to some common assumptions, neither simple obedience to the Party leadership nor internalized belief in some legal reform ideology, whether legal professionalism or populism. Instead, it is the pragmatic strengthening of the SPC\u27s own financial security and sociopolitical status-the SPC is, in many ways, a rational actor that pursues its institutional self-interest. This theory of institutional pragmatism brings unique analytical cohesion to the SPC\u27s recent behavior, giving us a clearer sense of its current priorities and, perhaps, its future outlook

    Essays in Behavioral and Experimental Economics

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    My dissertation, Essays in Behavioral and Experiment economics, is composed by three different research studies. In Chapter 1, the study offers an alternative theory of decision making under uncertainty. The presence of some perceived ambiguity together with some ambiguity tolerance leads a risk-averse decision-maker with diminishing marginal utility over all income levels to nonetheless take a chance. This alternative theory also provides an explanation for the equity premium puzzle, and for why a risk-averse buyer of insurance may also exhibit loss aversion. In Chapter 2, the study examines the effects of punishment, communication, and the interaction of these mechanisms on trusting and trustworthy behaviors in a laboratory experiment. The results suggest that the presence of both punishment and communication options places a downward pressure on the trustee to reduce trustworthy behaviors. However, if trustor expresses the highest level of trust accompanied by communication without implementing any punishment threat, the trustee’s trustworthiness significantly increases. In Chapter 3, the study presents a theoretical model of play in the trust game that specifically features the potential which proposing equality has for promoting positive reciprocal behavior. The model proposes the utility function where the second mover appreciates the first mover that intends to split all earnings equally, and rewards this intention with positive reciprocity
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