Finance: Past, Present and Future

Frederic Mishkin and Eugene White have a very interesting  Federal Reserve Bank of Dallas working paper which looks at the Federal Reserve's response to the global financial crisis in the light of history. They argue that the "unprecedented actions" of the Fed during the global financial crisis were not that unprecedented as they all had precursors in the history of central banking. They draw on the central banking histories of the UK, US and France and suggest that "unprecedented actions" have been a part of a central bank's arsenal since the nineteenth century. Indeed, they argue that the failure of the Fed to take "unprecedented actions" in the 1930s contributed to the severity of the Great Depression.  I have several issues with this paper. First, some of the seven "unprecedented actions" of 2008-9 do not  have direct historical parallels (see chapter 6 of my book Banking in Crisis ). Second, although all seven action...

Following on from my post on Barry Eichengreen's book, click here to read a piece on the uses and abuses of history by the Economist's Buttonwood column. My book Banking in Crisis uses history to show the determinants of stable banking - shareholders have skin in the game or banks are constrained to investing in safe securities. It also uses history to show how severe the 2008 financial crisis was and why it happened. History is useful. However, history can also be abused. As Eichengreen recently quipped, 'societies cherry pick their histories'. Governments can use history to justify their policies even though the historical context and circumstances are totally different.

My copy of Barry Eichengreen's Hall of Mirrors: The Great Depression, the Great Recession, and the Uses - and Misuses - of History   arrived last Saturday morning. In this book, Eichengreen draws parallels between the Great Depression and the Great Recession. He also shows how the history of the Great Depression has been used and misused in dealing with the Great Recession. Below is a video where Eichengreen is interviewed about his new book.

Team Apex are representing Queen's University Belfast in the final of the KPMG International Case Competition . The four team members include three students from Queen's Management School. Team Apex's promotional video is below.

Today, Queen's Management School is launching a charity partnership with Tayto , the third largest snack manufacturer in the UK, and Marie Curie . As Head of School, I'm very keen to develop socially-responsible students who think about others and look beyond themselves. Our students (and staff) are going to be fundraising over the next few months with the aim of raising substantial funds for Marie Curie to help support their network of nurses caring for those with terminal illness.

In the short video below, Nobel laureate Joseph Stiglitz talks about the market failures and incentive problems that led to the 2008 financial crisis.

The Eurozone move into negative interest rates means that yields on some government (and corporate) bonds have become negative. Why would anyone want to hold such bonds? When will yields recover? The FT video below surveys the views of fund managers on these important questions.

My first encounter with an Apple product was 10 years ago when I bought an iPod. My Sony Walkman went through batteries every week, could only hold one cassette at a time, was bulky, and the sound quality was poor. The iPod was revolutionary and my 2005 version is still working. My second encounter with Apple was in 2010 when I bought an iPad in Apple's Boston store, just a few months after its launch. That iPad is still working and lasts 4-5 hours on a single charge, despite my son's best attempts at trying to destroy it. My most recent encounter with Apple was when I got my first iPhone. How had I survived so long without it, I hear you ask. Again, I'm impressed.  All of my Apple products are sleek, cool, easy to use, robust, durable and expensive. Apple produce quality products which sell at a premium price - this is one of the reasons why they have become the most-valued company ever in corporate history (and Carl Icahn thinks that Apple stock is still a b...

I'm thankful that I live in a democracy, but in the not-so-distant past, the electoral franchise was limited to males with a certain amount of wealth. Why did elites extend the franchise to females and the poor? Toke Aidt and his colleagues have a VOX column on this issue. Here is the executive summary of their column: Some theories suggest that the threat of revolution plays a pivotal role in democratisation. This column provides new evidence in support of this hypothesis. The authors use democratic transitions from Europe in the 19th century, Africa at the turn at the 20th century, and the Great Reform Act of 1832 in Great Britain. They find that credible threats of revolution have systematically triggered pre-emptive democratic reforms throughout history. I've contributed to this literature with a paper looking at the 1867 extension of the franchise in the UK. The paper is available here . I did not find much evidence to support a threat-of-revolution explanation for ...

My colleague Alan Fernihough has just had a paper published on the causes and consequences of mixed marriages in Ireland in 1911 - the paper is available here  and an earlier working paper is available here . His research has been covered in the Irish Times ( click here ) and the QUMS press release is here . The abstract of Alan's paper is below. This paper explores the characteristics associated with marriages between Roman Catholics and members of other religious denominations in Ireland before the Great War. Using the entire digitized returns of the 1911 population census, we find that such marriages were relatively rare, occurring in less than 1% of total marriages. Some of this infrequency can be attributed to ethno-religious hostility—especially in the north of the country. However, we also show that the rarity of intermarriage reflects local marriage markets, as non-Roman Catholics living in communities with fewer coreligionists were more likely to intermarry. We exa...

Below Harvard's Steven Pinker  gives an interesting interview on the paradox of why pessimism is so high in a world of increasing abundance. He also talks about the close correlation between peace and capitalism (or democracy and international organisations) as well as the importance of flushed toilets!