Youth in Greece

This short report aims to provide a synthesis of Eurofound data and analysis on the situation of young people in Greece. It draws upon existing Eurofound research that examined the issue of young people ‘not in employment, education or training’ (NEET). This research is particularly pertinent for Greece, which has been disproportionately affected by youth unemployment as a result of the economic crisis. Societal effects include the greater financial dependence of young people on the family income, and the delaying of family formation. The report finds that young people with a tertiary level of education, and young women looking for their first job are candidates for targeted policy action. In addition, the older NEET population (25–29 years) merits special attention

Electric-Field Heating Threshold for Charged Particles

In deriving expressions for the electrical conductivity in a gas, Kerrebrock, Cann, and others have recently recognized the importance of the elevated electron temperature to the conduction process. The present note attempts to point out that the role of the local electric field in maintaining the temperature difference ("nonequilibrium") between the electrons and the other species, and a threshold in the field strength below which the electronic (and ionic) mobilities are independent of field strength, can be derived from elementary considerations

Financial Liberalization and Credit-Asset Booms and Busts in East Asia

This paper presents econometric evidence that sheds new light on the role played by financial liberalization in the Korean and Thai financial crises. Drawing on previous empirical studies, it argues that while the banking systems of both Korea and Thailand supported their remarkable long-run growth performance, they were ill prepared to face the risks emanating from financial liberalization. New evidence is then presented which shows that financial liberalization set in motion a classic credit-asset boom and bust cycle in Thailand and created other weaknesses in the Korean financial system, which made both economies vulnerable to the sentiments of foreign investors and lenders. When capital flows were reversed, the ensuing liquidity crisis triggered a bust that was further magnified by currency depreciations and interest rate hikes. In the light of this analysis, the paper argues that besides strengthening prudential regulation and accounting standards, there is a need for upgrading management systems and expertise to deal with financial risks and an important need for a more widespread appreciation of the risks associated with financial liberalization. Furthermore, there remain gaps in the international financial architecture that need to be addressed, such as the absence of an effective international lender of last resort. Given that these weaknesses may require a long time to address, it is argued that in the interim period financial restraints can act as a relatively cheap, effective and transparent safety device in safeguarding financial stability.

'Unproductive' Credit and the South-Korean Crisis

We provide a novel empirical analysis of the South Korean economy that reveals large volumes of excess or 'unproductive' credit since the late 1970s, indicating that a sizeable proportion of total credit was used to refinance unprofitable projects. Our findings are consistent with the hypotheses of 'overlending' and 'overinvestment', which may reflect soft budget constraints and/or moral hazard. We argue that while these weaknesses were not on their own responsible for the financial crisis, their interaction with the risks emanating from capital account liberalisation created fertile ground for financial panic.

Information, Institutions and Banking Sector Development in West Africa

Using a new panel dataset for banks in eight West African countries, we explore the factors that exacerbate or alleviate excess liquidity, and the factors that promote or retard the rate of growth of banks’ assets. Loan default rates in the region are high, and variations in the rate impact on liquidity and asset growth. However, the size of this effect is very sensitive to bank age. Some types of improvement in the quality of governance reduce excess liquidity and promote asset growth. However, the impact of other types of improvement, particularly with regard to corruption, is ambiguous. We uncover evidence that provides an explanation for this ambiguity.Africa; Banking; Default; Institutions; Liquidity

A New Equation of State for CCS Pipeline Transport: Calibration of Mixing Rules for Binary Mixtures of CO2 with N2, O2 and H2

One of the aspects currently holding back commercial scale deployment of carbon capture and storage (CCS) is an accurate understanding of the thermodynamic behaviour of carbon dioxide and relevant impurities during the pipeline transport stage. In this article we develop a general framework for deriving pressure-explicit EoS for impure CO2. This flexible framework facilitates ongoing development of custom EoS in response to new data and computational applications. We use our method to generalise a recent EoS for pure CO2 [Demetriades et al. Proc IMechE Part E, 227 (2013) pp. 117] to binary mixtures with N2, O2 and H2, obtaining model parameters by fitting to experiments made under conditions relevant to CCS-pipeline transport. Our model pertains to pressures up to 16MPa and temperatures between 273K and the critical temperature of pure CO2. In this region, we achieve close agreement with experimental data. When compared to the GERG EoS, our EoS has a comparable level of agreement with CO2 -N2 VLE experiments and demonstrably superior agreement with the O2 and H2 VLE data. Finally, we discuss future options to improve the calibration of EoS and to deal with the sparsity of data for some impurities

Finance and Growth: What We Know and What We Need To Know

The paper reviews recent literature on the relationship between finance and growth, highlighting areas where we need to know more. The paper argues that institutions, such as financial regulation, have a first-order effect on financial development and growth, and that their effectiveness could determine the success or failure of policies like bank privatisation or financial liberalisation. It concludes that a better understanding of the obstacles to financial development, which include institutional, legal and political economy constraints, is needed.

Financial Liberalisation and the South Korean Financial Crisis: Some Qualitative Evidence

This paper provides a novel analysis of the South Korean financial crisis drawing on the findings of a unique survey of IMF/World Bank officials and South Korean economists. The survey reveals that over-optimism and inadequate recognition of financial risks inadvertently led to excessive risk taking by Korean financial intermediaries. It also indicates that the sources of over-optimistic assessments of East Asian economies, including Korea, were mainly to be found outside East Asia, including the IMF, the World Bank, western media and analysts. Weaknesses in risk management were the result of (i) lack of expertise in relation to handling the risks associated with capital flows, and (ii) disincentives to manage risks emanating from a relatively successful history of government provided safety nets for both industry and banking. Financial liberalisation widened risk-taking opportunities, by allowing lending to companies outside Korea. It also created additional disincentives for managing risk by intensifying competition and eroding bank franchise values. Finally, weaknesses in prudential regulation allowed bank portfolios to become much riskier, importantly in terms of maturity mis-matches between dollar-denominated assets and liabilities. The liquidity crisis, which followed the re-assessment of the South Korean economy by international lenders in late 1997, triggered a full-blown financial crisis because of the absence of an effective international lender of last resort.Financial liberalisation; financial crisis; over-optimism; moral hazard

Government, Openness and Finance: Past and Present

We explore the role of government in the nexus of finance and trade starting from the earliest days of organised finance in England and then broadening the analysis to 84 countries from 1960 to 2004. For 18th century England, we find that the government expenditures and international trade did have a positive long-run effect on financial development when measured as the value of private loans made by the Bank of England. For the wider panel of countries and more recent data, we find that government expenditures and trade have positive effects on financial development for countries that are in the mid-ranges of economic development as measured by their per capita incomes, but have little effect for poor countries and strongly negative effects for the wealthiest ones.

Is government ownership of banks really harmful to growth?

We show that previous results suggesting that government ownership of banks has a negative effect on economic growth are not robust to adding more 'fundamental' determinants of economic growth, such as institutions. We also present regression results from a more recent period (1995-2007) which suggest that, if anything, government ownership of banks has been associated with higher long run growth rates, even after controlling for institutions and other variables suggested by the growth literature. Drawing on the current global financial crisis, we provide a conceptual framework which explains why under certain circumstances government owned banks could have a greater effect on economic growth than privately-owned banks