Governments face all kinds of crises every day, the approaches may be different but the goal is always the same—maintain stability. While, wars and crimes against humanity tend to take a toll on the population, infrastructure and terrain quite literally, financial crises can psychologically cripple a country. There’s something about a financial crisis that conjures a level of panic that could rival the outbreak of a deadly disease. Maybe this is caused by a lack of visible end, as it seems the light at the end of the tunnel is only made clear at the end of the crisis. Even with examples from history to refer to, each financial crisis seems to take on a version all its own like a new strain of a deadly virus. The government tries to administer the correct corresponding solution, but often it feels as though one might as well have gone in blind; as the policies’ true impact are unclear until several years later. Like a vaccine each new version is adjusted and reconfigured in hopes to take care of the new symptoms. Each formula is saved and stored so that experiments and tests can always continue in the future. Today in the modern world we would like to believe that some of these vaccines have reached a status of 100% confidence level. Though, as with the commonly used tools in times of crisis, one can never fully count on a one size fits all packages.
When a financial crisis infects a country they have a few remedies to stabilize the economy: import tariffs, industry subsidies, fiscal stimulus and monetary policy adjustments using interest rates. The method or combination of methods chosen coincides with the current trusted economic school of thought in the country. The American School believes that economic policy should protect...
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Off the Cliff and Back? Credit Conditions and International Trade during the Global Financial Crisis Davin Chor and Kalina Manova NBER Working Paper No. 16174
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Rhee, C., & Song, E. Y. (2013). Trade Finance and Trade Collapse during the Global Financial
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Revival following the crisis just when the vulnerabilities in the financial sector have been addressed without endangering the fiscal sustainability. The crisis resolution actions generally involve costly government reorganization of private sector’s and the financial sector’s balance sheet. This can have a long-term negative effect on the public debt levels. Besides,
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Carbaugh, Robert J., “International Economics”, 12th ed., Mason, OH: Thomson South-Western, a part of the Thomson Corporation, 2009.
Carbaugh, Robert J., “International Economics”, 12th ed., Mason, OH: Thomson South-Western, a part of the Thomson Corporation, 2009.
International Trade finance as an integral part of global trade today it includes activities like Lending, Issuing letter of credit, export credit and insurance, Import credit and insurance. The companies that are associated with trade finance consists of importers and exporters, banks and financiers, Insurers and export credit agencies as well as others that provide the service in the process. Tra...
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The 2008-09 global financial crisis is a familiar topic in this decades to understanding its implications for future. Nowadays, the world faced much more than a financial crisis. In addition, side effects of the financial crisis must be half of a discussion in order to understand holistically about the consequences that led to the global financial crisis and spread the effect around the world. The 2008-09 crisis in general changed the world’s economic and financial landscape as a whole. In order to understanding this issues as a whole, there is the two basic types of costs for investors and consumers: economic costs and financial costs. Both are interrelated each other and tend influence each other. The world economy was faced by financial and its deepest downturn in decades and the first simultaneously recession in the industrial world since the first oil crisis of 1973-74. The International Monetary Fund significantly reduces its forecasts for global 2009 real growth from 2.2 percent to 0.5 percent, as the macroeconomic implications of the financial crisis became better understood, and as the depth of the financial crisis itself became apparent,. This reduction occurred only three months after the IMF’s earlier forecast. At that time, many industrialized countries faced by their financial crisis. This statement was state in a book Global Financial Crisis: Impact and Solutions by Paolo Savona, he said, “ . . . the industrialized countries were the hit hardest with the forecasts of their real growth dropping to a declined of 2 percent down from the October estimate of a modest 0.5 percent. Hardest hit was the United States, where growth was expected to declined by 1.6 percent from the earlier estimate zero...” (Paolo Savona, 201...
Warwick J. McKibbin, Andrew Stoeckel, The Potential Impact of the Global Financial Crisis on World Trade
Some of the major questions that are addressed in International Political Economy (IPE) are questions surrounding the debt crisis. Many people want to know how it happened, what made the crisis worse than it originally was, the factors that contributed to worsening it and the plans implemented to improve the situation. To answer this, the role played by Least Developed Countries (LDC) and Developed Countries (DC’s) needs to be evaluated.
The international financial market is the worldwide marketplace where people trade financial assets across countries for example, bonds, currencies, stocks, derivatives, commodities. In the 19th century, financial capital was actively traded before two world wars and Great Depression. Many countries’ government implemented controls on international capital flows which decreased international capital flows during the world war. After the wars, there were efforts to increase the stability and integration of markets and to create various agencies to facilitate international trade such as IMF, WB, and WTO. International financial markets mainly contain 1. International money market 2. International bond market 3. International Equity market 4. International money market 5. International credit market.