Top PDF CHEAP MONEY POLICY AND ITS ROLE IN TRIGGERING FINANCIAL CRISES

CHEAP MONEY POLICY AND ITS ROLE IN TRIGGERING FINANCIAL CRISES

CHEAP MONEY POLICY AND ITS ROLE IN TRIGGERING FINANCIAL CRISES

beyond the crisis, goes beyond himself, without being overcome. Who connects a crisis to his failure condemns his own talent "and respects more problems than solutions." Depression is the required process of structural readjustment of productive activities to the real configuration of market data, for example, to the supply of capital goods and public evaluations. This means that depression is the first step towards returning to normality, based on actual production of goods and not on quicksand of credit expansion. Marius Spiridon, in his "The Cycle in Modern Economic Theory" shows that the business cycle plays an essential role in economic development over time. In fact, everything around us exists and functions by cycles more or less predictable.
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Public Financial Watchdogs, New Public Management and Value for Money in Tanzania

Public Financial Watchdogs, New Public Management and Value for Money in Tanzania

Agencies in the NPM doctrine act in the same manner as in the principal-agent theory, where the link between the agencies and the government is based on performance (Caulfield, 2002). According to Jacobsson and Sundström (2007, p. 5), ―agencification allows for politicians to steer both more and less. By hiving off ‗smaller‘, recurrent and technical matters into executive agencies (and thereby steer less) politicians will have more time for ‗big‘ and ‗important‘ matters (and thereby steer more).‖ That is, agencies have a role to strengthen politicians‘ ability to steer the administration. Majone (1997, p. 157) noted that ―the chief executives of the regulatory agencies have a well defined agenda and their success is me asured by the amount of the agenda they accomplish‖. According to OECD (2005), organizational change can be used to address a problem without guaranteeing that anything else will be done. In most cases, re-organization is used as a substitute for making hard choices about management priorities. The OECD (2005, p. 108) stressed that ―creating an agency and labeling its work a priority does not automatically mean it will be treated as such‖. This supports Majone‘s (1997, p. 155) view that in creating agencies, governments will not only frame a suitable system of incentives, but also find it in their interest to create special mechanisms to monitor the behavior of their agents. Regarding the balance between agencies‘ autonomy and control, and mentioning New Zea land‘s example of separated organizations for policy, delivery, and regulation (OECD, 2005, p. 111), it was noted that many governments around the world were trying different organizational reforms to find the best institutional features that fit their own needs, but with the idea that some important parts of core government should be at arm‘s length of the state.
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Financial regulation and international criminal policy: the anti-money laundering system in Brazil and Argentina

Financial regulation and international criminal policy: the anti-money laundering system in Brazil and Argentina

The objective of this paper is to present and compare the process and the results of the implementation of the anti-money laundering system in Brazil and Argentina. Considering that the internal transformations cannot be discussed without a clear understanding of the international apparatus, attention will be given to the description of the “international policy” designed and conducted by FATF. Therefore, its incorporation into two different national realities, the Brazilian and the Argentinean ones, will shed light not only on the transnational transformations both States underwent but also on the anti-money laundering regime itself. The paper is divided into five parts. The first one presents a brief introduction on the emergence and development of the relationship between financial regulation and criminal policy. The two following sections are designed to present an overview of the anti money laundering system in Brazil and Argentina and of the role of FATF in their implementation process. The fourth section presents two Brazilian examples of situations in which full advantage of the FATF regime was taken: the National Strategy to Combat Corruption and Money Laundering and the BacenJud, a communication channel between the financial system and the judicial power. To conclude, final comments will be presented in connection with the central questions of the project this paper is part of .
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THE ASSET PRICE CHANNEL AND ITS ROLE IN MONETARY POLICY TRANSMISSION

THE ASSET PRICE CHANNEL AND ITS ROLE IN MONETARY POLICY TRANSMISSION

Once the notion of the q variable is clarified, we can proceed to study the place that Tobin’s concept has within the monetary policy transmission mechanism. Let us place ourselves in the case in which the money supply falls, which means that interest rates will rise. This will in turn provoke a drop in spending, including the spending level on capital markets, influencing negatively stock prices, as demand falls. In the same time, higher interest rates will alter the profitability ratio between stocks and bonds, putting extra pressure on stock prices. All these effects will lower the value of the q ratio defined by Tobin, which in turn will lead, as we have already seen, to a drop in investments. Similarly, a risen money supply and its consequences on the drop in interest rates will positively affect the evolution of financial assets by facilitating on one hand the capacity of the companies to finance their investment needs from capital markets and on the other hand by making the expansion through the acquisition of other companies more difficult due to their increased market value (Mishkin, 1995: 6). Cumulatively, these factors determine the companies to finance themselves cheaply from the market and used the attracted capital in order to buy new plant and equipment, thus having a positive effect on investment, consumption and, in a desired non-inflationist environment, an important effect on the production level due to the increased demand for those goods. This effect on production is however highly influenced by the elasticity that the supply side exhibits.
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Contagion Phenomena in Financial Crises: Evidence from the Portuguese and Spanish Exchange Rate Crises in the Early 1990s

Contagion Phenomena in Financial Crises: Evidence from the Portuguese and Spanish Exchange Rate Crises in the Early 1990s

The Spanish Peseta joined the EMS exchange rate mechanism (ERM) in August 1989 and the Portuguese Escudo followed suit in April 1992. Both currencies participated in the 76% fluctuation band around the central parity until the widening of the band in August 1993. From the very beginning and until the general EMS crisis in September 1992, the external nominal value of both currencies remained stable. Both the Peseta and the Escudo were among the strongest currencies in the mechanism: they remained well within the superior half of their fluctuation band, appreciated relative to their central parities as well as to the Deutschmark. Despite this past behaviour, both currencies were subject to numerous speculative attacks, far beyond the general EMS crisis, giving rise to three simultaneous currency devaluations of the respective central parities between September 1992 and March 1995.
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ON LIAPUNOV-TYPE INTEGRAL INEQUALITIES FOR EVEN ORDER DYNAMIC EQUATIONS ON TIME SCALES

ON LIAPUNOV-TYPE INTEGRAL INEQUALITIES FOR EVEN ORDER DYNAMIC EQUATIONS ON TIME SCALES

In this paper, Liapunov-type integral inequalities has been obtained for an even order dynamic equations on time scales. As an applications, an estimate for the number of zeros of an oscillatory solution and a cri- terion for disconjugacy of an even order dynamic equation is obtained in an interval [a, σ(b)] T .

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Contagion phenomena in financial crises : evidence from the Portuguese and Spanish exchange rate crises in the early nineties

Contagion phenomena in financial crises : evidence from the Portuguese and Spanish exchange rate crises in the early nineties

ii) After August 1992, this state of grace enjoyed by the escudo came to a sudden end. During this second sub-period, between August 1992 and July 1993, phases of credibility followed on from periods when a realignment was seen as imminent, i.e. phases in which the only common feature was an enormous volatility of the expected rate of devaluation. The devaluation of November 1992 brought little more than a temporary respite, for the rate of devaluation only briefly remained below zero. After the realignment, the rate of devaluation shot upwards again, becoming positive after March 1993. Credibility was once more temporarily restored for a brief two-month period after the realignment of May 1993.
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Essays on monetary policy and financial integration

Essays on monetary policy and financial integration

In order to track the relationship between the euro area stocks and sovereign bonds, the detrended cross-correlation analysis (DCCA) originally developed by Podobnik and Stanley (2008) is implemented. This method, which consists of a generalisation of the detrended fluctuation analysis (DFA) proposed by Peng et al. (1994) to detect temporal dependence in time series, has the advantage of being applied in the context of non- stationarity (see, e.g. Zebende et al., 2013 or Kristoufek, 2014), thereby circumventing econometric problems related to unit roots and periodic trends that may lead to spurious results. As documented by Bashir et al. (2016), the DCCA correlation coefficient proposed by Zebende (2011) proved to be more robust than the linear models in the presence of such issues. Accordingly, by means of this methodology it is possible to grasp if there are co-movements between equity and debt instruments at different scales, which may be relevant to support investors’ decisions. It is important to mention that, following the co-integration and vector autoregressive (VAR) approaches, most of the studies consider only one or two time scales, therefore not much is known about the dynamics of these two markets at varying time scales. This approach is employed not only to securities of each country, but also to figure out the correlations between stocks and bonds of different jurisdictions. This additional assessment may be useful to find out how concerns about the dynamics of financial instruments associated with a specific Member State may impinge on the performance of financial assets of other EMU jurisdictions.
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Eigenvalues of -( p +  q ) under a Robin-like boundary condition

Eigenvalues of -( p +  q ) under a Robin-like boundary condition

|v| q−2 vφ dx , for all v, φ ∈ W . It is worth pointing out that λ is an eigenvalue of problem (1) if and only if there exists u ∈ W \ {0} such that J ′ (u) = 0. In the following we shall prove the existence of a nontrivial critical point of J by using a classical result in Calculus of Variations, see [13, Theorem 1.2]. Obviously, W = W 1,q (Ω) is a reflexive Banach space. We have

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Understanding money and its use: the functional and structural reasons behind the use of money

Understanding money and its use: the functional and structural reasons behind the use of money

“Henry's wife is chatting with Joshua's and strategically lets slip that the state of Henry's shoes is getting so bad he's complaining about corns. The message is conveyed, and Joshua comes by the next day to offer his extra pair to Henry as a present, insisting that this is just a neighborly gesture. He would certainly never want anything in return. It doesn't matter whether Joshua is sincere in saying this. By doing so, Joshua thereby registers a credit. Henry owes him one. How might Henry pay Joshua back? There are endless possibilities. Perhaps Joshua really does want potatoes. Henry waits a discrete interval and drops them off, insisting that this too is just a gift. Or Joshua doesn't need potatoes now but Henry waits until he does. Or maybe a year later, Joshua is planning a banquet, so he comes strolling by Henry's barnyard and says “Nice pig” (...)" (p. 35)
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Brazil. J. Polit. Econ.  vol.30 número1

Brazil. J. Polit. Econ. vol.30 número1

unstable nature of capitalism, or was it a consequence of perverse ideological de- velopments since the 1980s? Given that capitalism is essentially an unstable eco- nomic system, we are tempted to respond to this last question in the affirmative, but we would be wrong to do so. In this essay, I will, first, summarize the major change to world financial markets that occurred after the end of the Bretton Woods system in 1971, and associate it with financialization and with the hegemony of a reactionary ideology, namely, neoliberalism. Financialization will be understood here as a distorted financial arrangement based on the creation of artificial financial wealth, that is, financial wealth disconnected from real wealth or from the produc- tion of goods and services. Neoliberalism, in its turn, should not be understood merely as radical economic liberalism but also as an ideology that is hostile to the poor, to workers and to the welfare state. Second, I will argue that these perverse developments, and the deregulation of the financial system combined with the re- fusal to regulate subsequent financial innovations, were the historical new facts that caused the crisis. Capitalism is intrinsically unstable, but a crisis as deep and as damaging as the present global crisis was unnecessary: it could have been avoid- ed if a more capable democratic state had been able to resist the deregulation of financial markets. Third, I will shortly discuss the ethical problem involved in the process of financialization, namely, the fraud that was one of its dominant aspects. Fourth, I will discuss the two immediate causes of the hegemony of neoliberalism: the victory of the West over the Soviet Union in 1989, and the fact that neoclassical macroeconomics and neoclassical financial theory became “mainstream” and pro- vided neoliberal ideology with a “scientific” foundation. Finally, I will ask what will follow the crisis. Despite the quick and firm response of
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Approximate viability for nonlinear evolution inclusions with application to controllability

Approximate viability for nonlinear evolution inclusions with application to controllability

We point out that the proof of the above lemma is purely technical and follows the same arguments as those used in the proof of [15, Lemma 1] (see also [7, Lemma 11.3.1]). However, it is important to note that if we use the tangency condition (TC1) instead of (TC) in the above lemma, then we get in (iii) in Lemma 2, f (t) ∈ F (σ(t), v(σ(t)), for a.e. t ∈ [τ, T ]. Actually, this σ(t)–variation, which appears in the first variable in F ( ·, ·), is a drawback for the existence of ε–solution of the Cauchy problem (1).

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Policy-effective financial knowledge and attitude factors

Policy-effective financial knowledge and attitude factors

avoids arbitrarily summing points and, at the same time, account for the answers as possibly resulting from different pieces of underlying knowledge. However, this approach emphasizes commonality among variables, and this may be a drawback if we are interested in behavioral outcomes, because if all variables are highly correlated (which is good as long as factor analysis is concerned), it may mean that other uncorrelated dimension might add discriminatory and explanatory power. Behrman et al.(2012) make an interesting progress on this issue, proposing a measure of financial knowledge based on a two-step procedure: the first generates weights that punish more the individuals who get wrong something that most of other get right, while the second uses principal components analysis to take into account correlation between questions. We propose that it is more useful to have a measurement of financial knowledge that can combine different (potentially uncorrelated) signals of knowledge and weight them according to their importance in predicting behavior.
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Interbank Linkages and Contagion Risk in the Portuguese Banking System

Interbank Linkages and Contagion Risk in the Portuguese Banking System

Interbank money markets play a fundamental role in financial systems, allowing financial institutions to cope with their day-to-day cash imbalances, by borrowing and lending central bank money among themselves. But, despite its crucial role in the redistribution of liquidity, interbank lending relationships are not just a way to mitigate liquidity risk. They can also be a contagion channel through which financial problems in one bank can spread to the remaining ones. Thus, interbank lending relationships might increase the risk of contagion, i.e., the risk that one financial institution’s inability to meet its required obligations will unable others to meet their own obligations when due, causing significant liquidity or credit problems. Ultimately, contagion risk can be seen as a form of systemic risk as, in case of contagion, financial instability can become so widespread that it may impair the functioning of the financial system to the point where economic growth and welfare might suffer significantly. That is why one of the prime concerns of contemporary monetary authorities is to increase system resilience to contagion risk, since it can endanger financial stability.
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The Role of Ownership Concentration, its Types and Firm Performance: A Quantitative Study of Financial Sector in Pakistan

The Role of Ownership Concentration, its Types and Firm Performance: A Quantitative Study of Financial Sector in Pakistan

The bank ownership can present significant economies of scope that may be vital to particular stages of national development. However, though banks offer firms with easy access to funds for expansion, relationship investors have been censured for their personal involvement with executives in deteriorating the company‘s value (Macey and Miller, 1997). The study conducted by Harris and Raviv (1990) presents proof that German banks are hesitant to discipline managers in client companies, especially when they are connected to these companies through cross shareholding system. Banks as representatives of board and or having shares in a firm are considered to protect their investments by supporting enormous internal cash transfers into hidden reserves within German firms that can be used to support diminishing firm income in a crisis. This accounts to banks making an alliance with managers to keep down dividends payable to the outside shareholders (Baums, 1993).
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Exchange-rate derivatives, financial fragility and monetary policy in Brazil during the world financial crisis

Exchange-rate derivatives, financial fragility and monetary policy in Brazil during the world financial crisis

The evaluation errors about the effects of the crisis over Brazilian economy by Central Bank were caused, however, by the excessive rigidity of Inflation Targeting Regime in Brazil. This excessive rigidity is clearly shown by the fact that Brazilian Central behave in an asymmetric way in relation to the risks of target loss and fall of level of output. In December, or even in October, the balancing of risks between inflation and recession showed clearly that the risk of output contraction was much higher than the risk of inflation target loss. So the Central Bank could reduce the short- term interest rate in the meeting of October of COPOM. Instead, Central Bank adopted a strategy of “wait and see” the new information about the fall of output before decides about the reduction of interest rate. However, a “wait to see” strategy is not only a good policy for inflation control, but also for output stabilization, which is an element of objective function of policy maker, even under an ITR 3 . Monetary authority must anticipate movements of inflation and output in order to minimize the volatility of short- term interest rate and increase the welfare of society 4 . In the case of Brazil, Central Bank, however, always act promptly in order to avoid the risk of output loss, but choose to “wait and see” if output would fall or not. This shows an excessive rigidity of ITR in Brazil, rigidity that is demonstrated by the low care about the effects of monetary policy over the level of economic activity.
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The translocator protein (Da) and its role in  disorders

The translocator protein (Da) and its role in disorders

Although it has been several decades after the establishment of TSPO upregulation during neuroinflammation, the role of TSPO and its signalling mechanisms in regulation of neuroinflammation is yet to be elucidated. At this point, it is also imperative to understand the biphasic role TSPO in neuroinflammation and neuropsychiatric illness. A study by Bae et al., investigated the role of TSPO in regulating LPS-induced microglia activation and neuroinflammation both in vivo and in vitro. The results suggest that knock-down of TSPO leads to increased gen- eration of pro-inflammatory cytokines such as TNF and IL-6 expression. On the other hand, the opposite occurred with TSPO over-expression, the generation of pro-inflammatory cytokines was attenuated when compared to control BV2 cells. The authors explain that the increased expression of TSPO during neuroinflammation might be an adaptive response mechanism. Thus, this study provides the molecular level experimental data demonstrating that TSPO is a negative regulator of microglia activation and neuroinflammation (Bae et al., 2014; Najjar et al., 2013). In addition to neuroinflammation also in neuropsychiatric disorders the biphasic role of TSPO has been reported. A decrease in the mRNA levels of TSPO was observed in lymphocytes from patients with anxiety, generalized anxiety disorder, PTSD and obsessive-compulsive disorder (OCD) compared to those in healthy controls (Dell'Osso et al., 2010; Nudmamud et al., 2000; Rocca et al., 2000; Rocca et al., 1998). In contrast, the TSPO mRNA levels were normalized after anxiety treat- ments (Rocca et al., 1993). In a study involving patients with general- ized social phobia (GSP), the TSPO density in the platelets was lower than that in the control group (Johnson et al., 1998). This lower level of platelet TSPO density was evident in a subgroup of bipolar patients, who also fulfilled the criteria for adult separation anxiety disorder (Abelli et al., 2010). Furthermore, a decreased platelet TSPO density was observed in post-Persian Gulf War patients with PTSD (Gavish et al., 1996) and depressed patients with adult separation anxiety (Chelli et al., 2008). Finally, schizophrenic patients with aggressive behaviour presented a lower density of platelet TSPO and scored sig- nificantly higher on hostility, anxiety, state anger, and emotional dis- tress compared to homicidal and nonaggressive schizophrenic patients and the controls (Ritsner et al., 2003). A study by Weizman et al., de- monstrated that there were no association between depression and re- duced TSPO expression (Weizman et al., 1995). However, co-morbid adult separation anxiety (Abelli et al., 2010) or suicidality (Soreni et al., 1999) was associated with reduced TSPO expression in patients with depression or bipolar disorder.
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P-glycoprotein and Its Role in Treatment Resistance

P-glycoprotein and Its Role in Treatment Resistance

Sonuç olarak P-gp geni etkisizleştirilmiş transgenik farelerin bazı toksik maddelere karşı, sağlıklı farelere göre çok daha duyarlı olduğu bildirilmiştir (Schinkel 1997, Xie 2004). P-gp’nin ilaç emilimine etkisini araştırmak için yapılan in vitro bir çalışmada, insan kolon adenokarsinom hücrelerine uygulanan vinblastin ve dosetakselinin hücre içinden hücre dışına olan transportunun 10 ve 20 kat fazla olduğu gösterilmiş. Ardın- dan ortama P-gp inhibitörü olan verapamil eklenmesiyle hücre dışından hücre içine olan ilaç transportunun önemli oranda arttığı bildirilmiştir (Lin ve Yamazaki 2003). P- gp’nin, oral yoldan alınan substrat ilaçların bağırsak lümeninden absorpsiyonlarını sınırlandırarak oral biyoyararlanımlarında ve ayrıca kandan bağırsak lümenine geri salgılanmalarını sağlayarak intestinal eliminasyonlarında önemli rol oynadığı bildiril- mektedir (Spahn-Langguth 1998).
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Two Decades after the Rio Earth Summit: Sustainable Development Quo Vadis?

Two Decades after the Rio Earth Summit: Sustainable Development Quo Vadis?

Similar to its initiative in establishing the GEF, the World Bank more recently positioned itself as a major financial actor in the area of climate change. At stake are an estimated US$ 100 billion per year by 2020 from both public and private sources to assist developing countries in mitigating or adapting to climate change. In anticipation of substantial new money flows, the World Bank launched its Strategic Framework on Development and Climate Change in 2008. It was designed to serve as a model for channeling large-scale financing to developing countries to cover the added cost and risks to development posed by climate change. 2 Once again, the World Bank’s anticipation of donor sentiment seems to have paid off. At the Conference of the Parties (COP) summit on climate change in Cancun in December 2011, the World Bank was appointed to serve as the interim trustee of a new Green Climate Fund (GCF). The exact working modalities of the GCF and the role of the World Bank Group as interim trustee are still to be determined in on- going international negotiations.
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Brazil. J. Polit. Econ.  vol.31 número5

Brazil. J. Polit. Econ. vol.31 número5

Although the supply side of economic development and a strategic industrial policy are relevant, the demand side is where the major growth bottlenecks are. Besides the fact well established since Keynes that the supply does not automati- cally create demand, there are two structural tendencies that limit demand and, so, investment opportunities: the cyclical tendency of wages to increase below the growth of the productivity, and the tendency to the overvaluation of the exchange rate.

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