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Begin New Search Topic Financial Crisis Author Pierre Siklos

1. Reforming Finance: Macro and Micro Perspectives

Author:
Pierre Siklos
Publication Date:
02-2014
Content Type:
Working Paper
Institution:
Centre for International Governance Innovation
Abstract:
Reforms of the financial system in the wake of the global financial crisis are incomplete. Beyond reforms, good judgment is essential in a crisis. Short-termism in finance cannot be completely controlled by regulation and supervision. Financial crises are inevitable but need not be as virulent at the global financial crisis. Central banks will have to rethink their policies and how they interact with other agencies partially responsible for maintaining financial system stability.
Topic:
Economics, Globalization, International Trade and Finance, Financial Crisis, Governance, and Reform
Political Geography:
Europe

2. A Failure to Cooperate? Raising the Risks and Challenges of Exiting Unconventional Monetary Policies

Author:
Domenico Lombardi, Pierre Siklos, and Samantha St. Amand
Publication Date:
03-2014
Content Type:
Policy Brief
Institution:
Centre for International Governance Innovation
Abstract:
Central banks (and policy makers more generally) should seek a global consensus before implementing policies that may have global repercussions. The global economy can only become more resilient to shocks when there is greater central bank cooperation. The G20 is a natural venue to promote cooperation and to help the global economy return to stronger economic growth, but other forums may also be appropriate. The maintenance of financial stability is a common resource and should be treated as such. Excessive reliance on sovereignty is counterproductive and contains the seeds of the next crisis.
Topic:
Economics, International Cooperation, International Trade and Finance, Markets, and Financial Crisis

3. A Markov Switching Approach to Herding

Author:
Pierre Siklos, Martin T. Bohl, and Arne C. Klein
Publication Date:
12-2013
Content Type:
Working Paper
Institution:
Centre for International Governance Innovation
Abstract:
Existing models of market herding suffer from several drawbacks. Measures that assume herd behaviour is constant over time or independent of the economy are not only economically unreasonable, but describe the data poorly. First, if returns are stationary, then a two-regime model is required to describe the data. Second, existing models of time-varying herding cannot be estimated from daily or weekly data, and are unable to accommodate factors that explain changes in this behaviour. To overcome these deficiencies, this paper proposes a Markov switching herding model. By means of time-varying transition probabilities, the model is able to link variations in herding behaviour to proxies for sentiment or the macroeconomic environment. The evidence for the US stock market reveals that during periods of high volatility, investors disproportionately rely on fundamentals rather than on market consensus.
Topic:
Economics, Globalization, International Trade and Finance, Markets, and Financial Crisis
Political Geography:
United States and Canada

4. From Bretton Woods to the Euro: How Policy-Maker Overreach Fosters Economic Crises

Author:
Pierre Siklos
Publication Date:
08-2012
Content Type:
Working Paper
Institution:
Centre for International Governance Innovation
Abstract:
This paper considers the relevance of the Bretton Woods system for the prospects of reform of the international monetary system and in the context of the ongoing euro area financial crisis. It explores the challenges that must be met in attempting to reform the present international monetary system and euro area policies. After considering what resonates, and what does not, from the Bretton Woods regime of fixed exchange rates, it examines some of the key lessons from that era. The paper concludes that policy makers at Bretton Woods promised too much in terms of the stability and durability of the policy regime, and did not give sufficient thought to how the arrangement devised in the 1940s would actually function. They failed to instill the logic of collective action among their members. In particular, the Bretton Woods system failed because the agreement paid virtually no attention to governance issues. Finally, in terms of the current situation in the euro zone, policy makers have failed to recognize that the problems are not purely economic; domestic political considerations are important too. A political-economy approach is required for the design of new international monetary arrangements. The same principles apply today when we contemplate the survival of the euro zone. Politicians need to be more realistic and less ambitious, lest they create the preconditions for the next global crisis.
Topic:
Economics, Global Recession, Financial Crisis, and Governance
Political Geography:
Europe