Stability – BSE Voice

Editor’s note: This post is part of a series showcasing Barcelona GSE master projects by students in the Class of 2014. The project is a required component of every master program.

Too-many-to-fail: a theoretical approach

Author:

Jaume Martí

Master Program:

Finance

Paper Abstract:

The recent financial crisis has generated enormous economic and human costs. New regulatory framework has been proposed in order to provide banks with better incentives.

My goal in this project is to theoretically explain several market failures that happened prior to the financial crisis and propose a model that captures these phenomena in the banking sector. To end up, I suggest different macroprudential measures that could be undertaken with the ultimate objective of providing a more stable financial system.

[slideshare id=39413387&doc=too-many-to-fail-140923034120-phpapp02]

Alessandra Bonfiglioli (PhD, Stockholm) and Gino Gancia (PhD, Stockhold) are both Barcelona GSE Affiliated Professors. Last year, they jointly published an article titled “Uncertainty, Electoral Incentives and Political Myopia” in the Economic Journal.

IS THIS THE RIGHT TIME TO ADOPT POLICIES FOR THE LONG TERM?

In this recent article, Alessandra Bonfiglioli (UPF) and Gino Gancia (CREI) argue that periods of high economic uncertainty like the current one are particularly favorable for the adoption of long-term policies, such as fiscal stabilizations and other structural reforms. The reason is that high uncertainty implies that economic performance and electoral outcomes depend more on luck and less on policy choices. This makes politicians less reluctant to adopt policies with current costs but future benefits. Continue reading “Spotlight on Faculty Research: Profs. Alessandra Bonfiglioli and Gino Gancia”