WHEN T H E BROOKINGS Panel on Economic Activity began in 1970, the world economy roughly accorded with the idea of three distinct economic systems: a capitalist first world, a socialist second world, and a developing third world which aimed for a middle way between the first two. The third world was characterized not only by its low levels of per capita GDP, but also by a distinctive economic system that assigned the state sector the predominant role in industrialization, although not the monopoly on industrial ownership as in the socialist economies. The years between 1970 and 1995, and especially the last decade, have witnessed the most remarkable institutional harmonization and economic integration among nations in world history. While economic integration was increasing throughout the 1970s and 1980s, the extent of integration has come sharply into focus only since the collapse of communism in 1989. In 1995 one dominant global economic system is emerging. The common set of institutions is exemplified by the new World Trade Organization (WTO), which was established by agreement of more than 120 economies, with almost all the rest eager to join as rapidly as possible. Part of the new trade agreement involves a codification of basic principles governing trade in goods and services. Similarly, the International Monetary Fund (IMF) now boasts nearly universal membership, with member countries pledged to basic principles of currency convertibility. Most programs of economic reform now underway in the developing world and in the post-communist world have as their strategic aim the

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Economic Reform and the Process of Global Integration

Econometric policy evaluation: A critique

This paper solves explicitly a simple equilibrium model with liquidity risk. In our liquidityadjusted capital asset pricing model, a security s required return depends on its expected liquidity as well as on the covariances of its own return and liquidity with the market return and liquidity. In addition, a persistent negative shock to a security s liquidity results in low contemporaneous returns and high predicted future returns. The model provides a unified framework for understanding the various channels through which liquidity risk may affect asset prices. Our empirical results shed light on the total and relative economic significance of these channels and provide evidence of flight to liquidity. r 2005 Elsevier B.V. All rights reserved.

Market Liquidity: Asset Pricing with Liquidity Risk

Financial systems are crucial to the allocation of resources in a modern economy. They channel household savings to the corporate sector and allocate investment funds among firms; they allow intertemporal smoothing of consumption by households and expenditures by firms; and they enable households and firms to share risks. These functions are common to the financial systems of most developed economies. Yet the form of these financial systems varies widely. In the United States and the United Kingdom competitive markets dominate the financial landscape, whereas in France, Germany, and Japan banks have traditionally played the most important role. Why do different countries have such different financial systems? Is one system better than all the others? Do different systems merely represent alternative ways of satisfying similar needs? Is the current trend toward market-based systems desirable? Franklin Allen and Douglas Gale argue that the view that market-based systems are best is simplistic. A more nuanced approach is necessary. For example, financial markets may be bad for risk sharing; competition in banking may be inefficient; financial crises can be good as well as bad; and separation of ownership and control can be optimal. Financial institutions are not simply veils, disguising the allocation mechanism without affecting it, but are crucial to overcoming market imperfections. An optimal financial system relies on both financial markets and financial intermediaries.

比较金融系统 = Comparing financial systems

1. Introduction: 1.A Motivation 1.B Objectives and contributions 1.C Key findings: a brief synopsis 1.D Guide to the book 2. Contrasting approaches to bank regulation: 2.A Two approaches to bank regulation: 2.A.1 Public interest approach 2.A.2 Private interest view of regulation 2.B Bank regulation: how 2.C The Basel Committee and regulatory convergence 2.D Conclusion 3. How are banks regulated and supervised around the world?: 3.A Overview 3.B Structure, scope and independence of regulation and supervision 3.C What is a 'bank'? 3.D Entry into banking, capital requirements and supervisory powers 3.E Explicit deposit insurance schemes 3.F Private monitoring and external governance 3.G Does bank ownership type affect the choice of regulations and supervisory practices? 3.H Forces for greater harmonization of regulation and supervision among countries 4. What works best: 4.A Goals and boundaries 4.B Bank regulation and supervision and bank development 4.C Bank supervision, regulation, and stability 4.D Bank supervision, regulation, and bank efficiency 4.E Bank supervision, regulation, and bank lending 4.F Supervision, regulation, and bank governance 4.G Summary of results 5. Choosing bank regulations 5.A Recap and motivation 5.B Motivating example: Mexico and the United States 5.C Conceptual framework 5.D Empirical framework and data 5.E Summary remarks 6. Rethinking bank regulation: 6.A Approach and context 6.B Lessons and implications.

Rethinking Bank Regulation: Till Angels Govern

The high level of trade and financial integration reached by Europe both today and under the late 19th century gold standard suggests that important lessons can be learned by looking at past record to inform current issues. In this article, we draw a fresh picture of the European gold standard, and use it to derive a number of useful implications. The paper’s basic finding is that the stability of the European gold standard depended on the stance of the common monetary policy. Under the gold standard, this stance was disturbingly deflationary prior to 1895. As a result, debts became exceedingly heavy and monetary standards crumbled under their weight, not so much because fiscal policies became looser, but rather because debt burdens became unsustainable in the wake of continued deflation. Once gold was discovered and deflation gave way to inflation, real interest rates fell and debt grew more slowly. This study’s clear implication for the EMU zone, is that stability will hinge on the European Central Bank’s (ECB) policy not being too restrictive.

Stability Without a Pact? Lessons from the European Gold Standard 1880-1914

During the 1930s, rating agencies took up a central role in regulatory supervision that they still have today. The proximate cause for this changeover was the economic shock of the Great Depression. Exploring the performance of rating agencies in assessing the risks of sovereign debt, an important segment of the bond market, we do not find that superior forecasting capacities can explain the agencies' growing importance.

https://papers.ssrn.com/sol3/Delivery.cfm/SSRN_ID1738893_code1065073.pdf?abstractid=1738893&mirid=3

To Err is Human: Rating Agencies and the Interwar Foreign Government Debt Crisis

The French Crime of 1873: An Essay in Interpretation

Uncovering strange plots by early British anthropologists to use scientific status to manipulate the stock market, Anthropologists in the Stock Exchange tells a provocative story that marries the birth of the social sciences with the exploits of global finance. Marc Flandreau tracks a group of Victorian gentleman-swindlers as they shuffled between the corridors of the London Stock Exchange and the meeting rooms of learned society, showing that anthropological studies were integral to investment and speculation in foreign government debt, and, inversely, that finance played a crucial role in shaping the contours of human knowledge. Flandreau argues that finance and science were at the heart of a new brand of imperialism born during Benjamin Disraeli’s first term as Britain’s prime minister in the 1860s. As anthropologists advocated the study of Miskito Indians or stated their views on a Jamaican rebellion, they were in fact catering to the impulses of the stock exchange—for their own benefit. In this way the very development of the field of anthropology was deeply tied to issues relevant to the financial market—from trust to corruption. Moreover, this book shows how the interplay between anthropology and finance formed the foundational structures of late nineteenth-century British imperialism and helped produce essential technologies of globalization as we know it today.

Anthropologists in the Stock Exchange

La celebration du cinquantieme anniversaire de la creation du systeme de Bretton Woods invite a replacer les evolutions recentes du Systeme Monetaire Europeen dans une perspective historique. Dans le passe, les arrangements monetaires internationaux ont ete de trois types. A un pole, on trouve les systemes qu'on propose d'appeler « decentralises sans contrainte », ou la souverainete des politiques monetaires est totale (systemes de changes flottants). A l'autre pole, on trouve les systemes completement centralises, ou chaque participant a transfere son pouvoir monetaire a une organisation centrale qui definit la politique de l'union (Federal Reserve System aux Etats-Unis). Entre les deux enfin, on trouve les systemes « decentralises avec contrainte » (comme par exemple le SME, ou Bretton Woods), ou les politiques domestiques sont definies individuellement mais doivent prendre en compte les politiques des autres membres. Cet article se propose de faire le point sur ces options en soulignant leurs avantages et leurs inconvenients respectifs. Deux conclusions principales se degagent. D'abord, l'autonomie que confere un systeme de changes flottants est probablement illusoire, car le flottement neutralise une grande partie des avantages de la souverainete monetaire. La deuxieme conclusion est que les systemes decentralises avec contrainte, du type SME, contiennent un biais deflationniste qui les rend couteux et difficilement soutenables. Au confluent de ces deux problemes se trouve le dilemme fondamental des systemes internationaux pour lesquels il n'est pas d'equilibre stable sans construction d'une certaine forme de supranationalite.

Marc Flandreau

Papers

Stability Without a Pact? Lessons from the European Gold Standard 1880-1914

To Err is Human: Rating Agencies and the Interwar Foreign Government Debt Crisis

The French Crime of 1873: An Essay in Interpretation

Anthropologists in the Stock Exchange

Le système monétaire international et l'union monétaire européenne