Browsing by Subject "Financial crises"
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Item Did the FED contribute to the housing price bubble? Evidence from Taylor Rule Deviations(2012-05) Fitwi, Abrar; Hein, Scott E.; Mercer, Jeffrey M.; Winters, Drew B.; Harrison, David M.; Westfall, Peter H.I test the effects of two competing forces behind the housing price bubble that preceded the recent financial crisis. Using deviations from the Taylor Rule as a measure for whether target fed funds rates were low relative to the Fed’s earlier behavior based on existing economic performance and with due consideration given to issues of stationarity and optimal lag length, I find that the role of low target fed funds rates, but not international capital inflows to the U.S., was significant in explaining housing prices. My evidence supports the monetary policy based explanation for the housing price bubble. To the contrary, I find little evidence supporting the global saving glut hypothesis. The result is robust to various additional tests such as Granger causality and other VAR methods. This evidence has an important implication on the current and future Fed policies, suggesting there might be an important cost associated with “easy” monetary policy.Item Dubai, debt, and dependency : the political and economic implications of the bailout of Dubai(2011-05) Frasca, Alexandra Marguerite; Henry, Clement M., 1937-; Leeds, SandyThe goal of this thesis is to identify the main political and economic implications of Dubai’s debt crisis and subsequent bailout by her wealthier and more powerful sister emirate Abu Dhabi. This paper examines the implications of the bailout of Dubai on two levels: Dubai’s relationship with Abu Dhabi and Dubai’s relationship with the international investment community. The paper first provides a brief background on Dubai, one of the seven emirates that make up the United Arab Emirates (UAE), and discusses Dubai’s key characteristics that helped give Dubai her nickname Dubai Inc. – an opportune location, the Al-Maktoum ruling family, and state-led entrepreneurship. It then discusses Dubai’s historically competitive relationship with Abu Dhabi and Dubai’s push to diversify economically away from oil. The paper outlines two key economic developments – the rise of Dubai’s real estate and tourism sectors and the creation of Dubai’s government-related enterprises (GREs), which helped finance the real estate bubble. This thesis suggests that Abu Dhabi now holds unquestionable power over Dubai and can control Dubai’s GREs and their subsidiaries such as Dubai World. This paper also argues that the international investment community will demand increased transparency and higher standards of corporate governance of Dubai’s businesses in light of the entrenched poor practices that the bailout exposed within the tiny-city state's GREs and companies.Item The "insurance trap," institutional inertia, and structural vulnerability in the developmenal state: the effects of the Asian economic crisis on Hong Kong, Singapore, South Korea, and Taiwan(Texas Tech University, 2001-12) Marie, Joseph John St.The enduring puzzle of the Asian economic crisis is the variation in its effects on Asian nations. Four Asian nations stand out as cases used to explore the variation in economic performance. South Korea, Singapore, Taiwan and Hong Kong. Answers to this puzzle are explored by examining the legacies of state formation and how institutional inertia creates vulnerabilities in the developmental state, and how these institutions resist change, even in the face of a crisis, when liberalization is deemed necessary for resolution and integration into the wider global economy. Developmental policies shield both public and private firms from competition and create structural vulnerabilities. Such vulnerabilities lead to the "Insurance trap." The "Insurance trap" is the situation faced by developmental states when in the course of their metamorphosis, it creates vulnerabilities through policies that distort markets, such as directed lending, promotion of large industrial conglomerates and repressed financial systems. Institutional Inertia precludes timely reform of this system. The failure to adapt to globalization through reform of the regulatory and economic system will result in an economic crisis. Low crisis performance exposes the "Insurance trap." This study finds that variation in crisis performance may be explained by the existence of the "Insurance trap." The regulatory regime, exchange rates, transparency and economic structure are all significant variables within the multivariate qualitative model set forth in this work. To be sure, specific institutional and economic structures are important considerations for developing nations if they want to avoid self-fulfilling economic crises.Item The use of trade credit under extreme conditions: financial distress and financial crisis(2004) Preve, Lorenzo A.; Titman, Sheridan