Market failures - rationale in era of globalisation, Microeconomics

Market failures (even when they do not have international external effects)

i) Self-fulfilling bank runs, government debt runs, currency crises.

ii) Liquidation costs of liquidity or semi-liquidity crises that results in runs.

iii) Excessive liquidation costs (i., the avoidable liquidation costs on top of the unavoidable ones) in insolvency crises where there are also runs.

iv) "Conditionality lending" as a way to resolve two coordination issues: need to design appropriate policy changes based on independent  and superior information (thousands of creditors cannot do it) cost - when no private creditor is large enough and risk-neutral enough in a crisis to do that (as uncoordinated creditors rush to the exist) conditionality lending is a form on "delegated monitoring and coordination mechanisms" when there are "multiple principles" for the debtor agent.

v) Reducing the adjustment costs (need for how adjustment and stock adjustment and costly macro/structural reforms) for countries with serious underperformance and policy shortcomings.

vi) Need to actively coordinate debtor and creditors action in crisis management (resolution because of collective action problems (rush to exists, such to courthouse, holdout / tree rider problems) between creditors and between the debtors and its creditors including IMF pushing for appropriate policy regime changes.

vii) Possible provision of lender of last resort support to domestic banking systems that are informally or formally ‘dollarised'. As more countries ‘dollarise', ‘euroise', join monetary and currency unions or are informally dollarised, domestic monetary authorities cannot provide such bender or last resort support.

Posted Date: 11/9/2012 6:32:17 AM | Location : United States







Related Discussions:- Market failures - rationale in era of globalisation, Assignment Help, Ask Question on Market failures - rationale in era of globalisation, Get Answer, Expert's Help, Market failures - rationale in era of globalisation Discussions

Write discussion on Market failures - rationale in era of globalisation
Your posts are moderated
Related Questions
Discuss the impact of rational self-interest on each of the following decisions

The prevention of major swings in economic activity can be handled most easily by the: A. Household sector B. business sector C. financial sector D. government sector why?

hey, I just have a question on how to apply things like ATC and AVC in a problem. im just not too sure about what happens to the quantity of a particular good when asked. this is p


The demand for soft drinks has been estimated asQx 20PX 0.25PY0.45M 2 Determine the own, cross and income price elasticities of demand. Interpret your results.

AskPharmaceutical companies can expect to earn large profits from blockbuster drugs (for high blood pressure, depression, ulcers, allergies, sexual dysfunction) while under patent

use a graphical illustration to describe briefly what the influence of each of the following be on the market supply of labour,(a) an increase in immigrants, (b) a reduction in wag


Do not submit more than 1 file in the Canvas submission link. A few years ago peanut farmers in India experienced a super-bumper crop due to favorable weather conditions. Initially

Labor Total Output 1 30 2 50 3 60 4 75 5 80 a) If the price of the firm’s output is $12 per unit and the wage rate is $100 per worker, how many workers should the firm choose to