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The financial crisis that began in 2007 in the United States swept the world, producing substantial bank failures and forcing unprecedented state aid for the crippled global financial system. Providing an international perspective, this book draws critical lessons from the causes of the crisis and proposes important regulatory reforms, including sound guidelines for the ways in which distressed banks might be dealt with in the future. While some recent policy moves go in the right direction, others, the book argues, are not sufficient to prevent another crisis. The book shows the necessity of an adaptive prudential regulatory system that can better address financial innovation. Stressing the numerous and complex challenges faced by politicians, finance professionals, and regulators, and calling for reinforced international coordination (for example, in the treatment of distressed banks), the book puts forth a number of principles to deal with issues regarding the economic incentives of financial institutions, the impact of economic shocks, and the role of political constraints.

This volume presents 28 essays on poverty by some of the leading experts in the field of economics. The book is divided into three sections, beginning with an essay about how poverty is measured. The first section is about the causes of poverty and its persistence, and the ideas range from the impact of colonialism and globalization to the problems of “excessive” population growth, corruption, and ethnic conflict. The second section is about policy: how should we fight poverty? The essays discuss issues such as how to get drug companies to produce more vaccines for the diseases of the poor, what we should and should not expect from micro-credit, what we should do about child labor, and how to design welfare policies that work better. The third section presents new ways of thinking about poverty such as the integration of psychology and economics, nonmarket institutions, and interconnections between race and economic inequality.

Our economies face constant challenges from many different directions. Structural reforms are implemented every day, either to grasp the benefits of globalization and technological change, or to avoid foundering on unaffordable welfare systems or the rise of new economies. Despite this flurry of reforms, many of their effects are insufficiently understood. This book explores many issues that arise from structural reforms by comparing a number of reforms across a large set of countries and sectors. First, through an innovative multisectorial input-output analysis, the book compares the effects of liberalization reforms in the telecommunication and electricity sectors across Europe. It finds that very similar and well-intended reforms can generate highly contrasted outcomes. It is also shown that governments must consider the effects of each reform on all sectors of the economy. Second, the book explores how governments can tailor their reform strategy to alter the redistributive effects of reforms. It shows that the government's approach to reforms has been very different across time and across countries. A government's approach depends on local institutions, on the nature of the opposition, and on the scope of the reform under way. The book, however, shows that governments do have alternatives. Often, there are ways to tailor reforms so as to protect specific parts of the population; and there are ways to experiment gradually, to avoid costly policy mistakes.

Why do financial institutions, industrial companies, and households hold low-yielding money balances, Treasury bills, and other liquid assets? When and to what extent can the state and international financial markets make up for a shortage of liquid assets, allowing agents to save and share risk more effectively? These questions are at the center of all financial crises, including the current global one. This book offers an original, unified perspective on these questions. In a slight, but significant, departure from the standard theory of finance, it shows how imperfect pledgeability of corporate income leads to a demand for, as well as a shortage of, liquidity, with implications for the pricing of assets, investment decisions, and liquidity management. The government has an active role to play in improving risk-sharing between consumers with limited commitment power and firms dealing with the high costs of potential liquidity shortages. From this perspective, private risk-sharing is always imperfect and may lead to financial crises that can be alleviated through government interventions.

The 1986 article by Grossman and Hart, “A Theory of Vertical and Lateral Integration,” has provided a framework for understanding how firm boundaries are defined and how they affect economic performance. The property rights approach has provided a formal way to introduce incomplete contracting ideas into economic modelling. This book collects papers and opinion pieces on the impact that this property right approach to the firm has had on the economics profession. It shows that the impact has been felt sometimes in significant ways in a variety of fields, ranging from the theory of the firm and its internal organization to industrial organization, international trade, finance, management, public economy, and political economy and political science. Beyond acknowledging how the property rights approach has permeated economics as a whole, the contributions also highlight the road ahead, showing how the paradigm may change the way research is performed in some fields, and what type of research is still missing. The book concludes with a discussion of the foundations of the property rights and more generally the incomplete contracting approaches to the firm and with a series of contributions showing how behavioral considerations may provide a new way forward.