In a recent paper in the Journal of Economics Perspectives, Philip Levine and Melissa Kearney use some novel techniques and data on miscarriages to ask whether teenage mums have children because they are poor or are they poor because they have children (their paper is available here and you can read Slate's coverage here). Interestingly, their evidence seems to indicate that teenage girls have children because they live in impoverished circumstances with poor future prospects. This, of course, raises questions about the future prospects of the offspring of teenage mothers. What role can public policy play in dealing with this issue? Does rising inequality and reduced social mobility make it harder for poor teenagers to escape the poverty trap?
As an undergraduate, I was taught about the failure of Herstatt Bank in 1974 and Herstatt risk. This bank was only the 35th largest bank in Germany at the time so why would anyone be interested in studying its failure? Herstatt failed because of its involvement in risky foreign exchange business. When it closed its doors on 26 June 1974, counterparty banks (mainly in New York) had not received dollars due to them because of time-zone differences - this is known as settlement risk. The cross-jurisdictional implications of its failure resulted in the Bank for International Settlements setting up the Basel Committee on Banking Supervision and Herstatt's failure was a key reason for the establishment of real-time gross settlements systems, which ensures that payments between two banks are executed in real time. The Bank of England's Ben Norman has an interesting post on Herstatt over at the Bank's new blog ( Bank Underground ). As well as giving an excellent overview of