A post by Dave Backus and Tim Kehoe
We talked last night about how differently the crises played out in Mexico and Greece. The question, of course, is why, but we’ll leave that one for you. Here are some of the specifics — and keep in mind that Mexico’s economy is roughly five times the size of Greece’s.
The European Union is one of the grand experiments of our time,with countries that had been at war earlier in the 20th century agreeing to closer economic ties. These ties have included, so far, free trade, free mobility of labor, and even (for some) a common currency. The question, then and now, is which activities to manage centrally, and which to leave up to local control.
A post by Stan Zin
I saw in the news today that Starbucks has entered a joint venture with Tata, one of India’s most respected business groups, to open coffee shops in India. I don’t know if India has an urgent need for coffee, but it reminded me that international ventures often run across obstacles that wouldn’t cross your mind. One of my favorite stories concerns Starbucks’ ill-fated attempt to enter the Norwegian market.
A post by Larry White
Paul Romer’s post about the differences between the FAA and financial regulators got me thinking. Are the latter so bogged down in detail that they miss the point? Do they lack bottom-line responsibility?
A post by Paul Romer
Tyler Cowen recently pointed to a paper of mine on financial regulation and the dynamics of rules that I wrote for the IMF. Dave Backus and John Cochrane then blogged their thoughtful reactions. I take up the discussion about financial regulation in a separate post, but here I want to focus on the role of the blogosphere in the scientific process.
A post by Paul Romer
I suggested in a recent paper that regulation of financial institutions could look less like the legalistic regulation at OSHA and more like the regulation at the FAA. Dave Backus asked what it would look like in practice. John Cochrane, the Chicago Booth financial economist and accomplished glider pilot, expressed doubt based on his own experience with the FAA.
A post by Kim Schoenholtz
Today, the U.S. Federal Open Market Committee (FOMC) announced a major update of its framework for setting monetary policy. While the FOMC emphasizes its “dual mandate” (regarding inflation and employment), the new framework is fully consistent with an inflation-targeting central bank.
On a recent trip to his native Australia, John Asker heard an interesting story about diamonds, dollars and deception. It’s a fun story in itself; it also relates to some of the themes discussed in the Firms and Markets course (as well as Game Theory and Business Strategy). Here are the details. Read the rest of this entry »
“If we persist with a legalistic rule setting process, the opportunists will thrive. We will settle into a fatalistic acceptance of systemic financial crises, flash crashes, and ever more exotic forms of opportunism.”
