Economic Logic

The recent financial crisis has scared a lot of countries into adopting so called macro-prudential policies that introduce frictions into ca...

What is the purpose of financial innovation? I would say it is to find new ways to insure against risk, to finance projects and to allocate ...

Art is something one may like to have for the enjoyment of it, but it is also often touted as an investment vehicle. Quite obviously, you wo...

When an author describes his work in the abstract or the introduction, it is common to highlight what is "new," "novel,"...

Japan has been able to sustain unusually high debt levels for a long time, even when other countries were facing debt crises despite having ...

The Second Basel Accord was put in place to more effectively prevent bank failures. The first one imposed some rather rigid rules that wher...

In dynamic stochastic models, standard utility function specifications imply that the curvature of this function determines directly both th...

The financial sector is not riding high in popularity polls lately. First, compensation is deemed excessive. Second, the general public ofte...

Many people avoid investing in certain types of firms they associate with unethical or sinful behavior. That would include tobacco companies...

Households with low incomes save little. In one way, this should not surprise us, as their propensity to consume is high because the margina...

One thing we have learned from the last recession is that the financial sector is quite important, that its dysfunction can have important c...

It is no secret that political connections help your business. The more more regulated or corrupt your economy, the more likely this is to b...

The game of heads and tails with a coin toss is universally recognized as a game where the odds of each outcome are exactly 50%. In monetary...

At least part of the blame for the last crisis was put on the lack of financial literacy of some borrowers who accepted mortgages they could...

Suicide is a trigger strategy and when to pull the trigger is a decision that involves forming expectations over future outcomes. It is a di...

The recent financial crisis has highlighted the sometimes very poor financial choices of households, in particular overborrowing. What leads...

People make dumb financial choices often because they miss some of the most elementary notions of finance, and they even realize that. Yet, ...

We continuously take economic decisions. Most of the time, they are trivial. Sometimes they are important, and any sensible person thinks ha...

Various religions have different prescription on how rich people should be. Early Christians advocated low wealth and much redistribution, m...

I tend to think that financial management, and especially risk management, are modern creations that came about after the introduction of an...