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
Aggregate Supply When referred to in the circumstance of GNP or GDP, aggregate supply refers to the labor and capital needs to proceeds the level of products and services need

shows teh steps in unitary mehod

Lorie teaches singing.Herr fixed cost are $1000 a month,and it costs her $50 of labor to give one class.the table shows the demand schedule for lorie''s singing lessons. Price

Define Nash equilibrium and explain with the help of the game ''prisoner''s dilemma''.

is it just assumed that a monopoly graph is showing economic profit instead of accounting profit

determinate equilibrium price and quantity. if Qd=7-1/2p AND Qs=1/4P-1/2

#suppose EEPCO is amultiplant monopolist with two plants: Gibe plant and Fincha plant. The operating costs of the two plants are: Gibe plant Tc1=10Q^2 and Fincha plant TC2=20Q^2.

What is the marginal opportunity producing the first unit of paper? The marginal opportunity cost of producing the forth unit of paper?

regression line drawn as Y=c+1075x, when x was 2 and y was 239, given that y intercept was 11. calculate the residual

Costs: If raw materials, machines and other things required for production could be made available freely then the study of the theory of the production and indeed, the study of