U.S. subprime financial crisis contagion on BRIC and European Union stock markets

ABSTRACTThe Copula Theory was used to analyze contagion among the BRIC (Brazil, Russia, India and China) and European Union stock markets with the U.S. Equity Market. The market indexes used for the period between January 01, 2005 and February 27, 2010 are: MXBRIC (BRIC), MXEU (European Union) and MXUS (United States). This article evaluated the adequacy of the main copulas found in the financial literature using log-likelihood, Akaike information and Bayesian information criteria. This article provides a groundbreaking study in the area of contagion due to the use of conditional copulas, allowing to calculate the correlation increase between indexes with non-parametric approach. The conditional Symmetrized Joe-Clayton copula was the one that fitted better to the considered pairs of returns. Results indicate evidence of contagion effect in both markets, European Union and BRIC members, with a 5% significance level. Furthermore, there is also evidence that the contagion of U.S. financial crisis was more pronounced in the European Union than in the BRIC markets, with a 5% significance level. Therefore, stock portfolios formed by equities from the BRIC countries were able to offer greater protection during the subprime crisis. The results are aligned with recent papers that present an increase in correlation between stock markets, especially in bear markets.

La crisis del diseño directivo subnacional de la educación chilena

El texto analiza el hacer de los directivos superiores subnacionales de educación en Chile, contrastando las normas que les rigen con las funciones cumplidas. Se trata de un estudio exploratorio, cualitativo, sustentado en entrevistas semiestructuradas aplicadas a quienes ejercieron el cargo de Secretario Regional Ministerial de Educación. Los antecedentes permiten comprender las brechas entre lo definido y lo realizado, y por tanto, identificar nudos críticos que requieren ser resueltos en diversos planos. A partir de estos antecedentes se formulan propuestas en el marco de una nueva organización de la educación en el plano subnacional que orienten e impulsen su rediseño, objetivo político clave en las propuestas de modernización de la gestión del Estado.

The contagion effect of public debt on monetary policy: the Brazilian experience

This paper attempts to explain why the Brazilian inter-bank interest rate is so high compared with rates practiced by other emerging economies. The interplay between the markets for bank reserves and government securities feeds into the inter-bank rate the risk premium of the Brazilian public debt.

External debt in developing economies: assessment and policy issues

More than one decade after the external debt restructuring (the Brady Plan), a great amount of literature has been published concerning the balance sheet factors in developing countries. The staff of international multilateral institutions joined with reputable academics in this great controversy. The external debt problem of the developing countries is back and once more reflections on its cause and on policy recommendations are analytically distinct. Our main task is to reflect on the recent external debt dynamics and assess how this debt has evolved. Our findings indicate that the susceptibility of some developing countries to default is associated with global imbalance, that is, the way they borrow.

The 2008 financial crisis and neoclassical economics

The 2008 global financial crisis was the consequence of the process of financialization, or the creation of massive fictitious financial wealth, that began in the 1980s, and of the hegemony of a reactionary ideology, namely, neoliberalism, based on self-regulated and efficient markets. Although capitalism is intrinsically unstable, the lessons from the stock-market crash of 1929 and the Great Depression of the 1930s were transformed into theories and institutions or regulations that led to the "30 glorious years of capitalism" (1948-1977) and that could have avoided a financial crisis as profound as the present one. It did not because a coalition of rentiers and "financists" achieved hegemony and, while deregulating the existing financial operations, refused to regulate the financial innovations that made these markets even more risky. Neoclassical economics played the role of a meta-ideology as it legitimized, mathematically and "scientifically", neoliberal ideology and deregulation. From this crisis a new capitalism will emerge, though its character is difficult to predict. It will not be financialized but the tendencies present in the 30 glorious years toward global and knowledge-based capitalism, where professionals will have more say than rentier capitalists, as well as the tendency to improve democracy by making it more social and participative, will b e resumed.

The new international financial crisis: causes, consequences and perspectives

The paper investigates the recent financial crisis within a historical and comparative perspective having in mind that it is ultimately a confidence crisis, initially associated to a chain of high risk loans and financial innovations that spread thorough the international system culminating with impressive wealth losses. The financial market will eventually recover from the crisis but the outcome should be followed by a different and more disciplined set of international institutions. There will be a change on how we perceive the widespread liberal argument that the market is always efficient, or at least, more efficient than any State intervention, overcoming the false perception that the State is in opposition to the market. A deep financial crisis brings out a period of wealth losses and an adjustment process characterized by price corrections (commodities and equity price deflation) and real effects (recession and lower employment), and a period of turbulences and end of illusions is in place.

Metas de inflação, taxa de câmbio real e crise externa num modelo kaleckiano

Inflation target, real exchange rate and external crisis in a Kaleckian model. Which role should the real exchange rate play in an inflation target regime? In this paper this point is discussed from the point of view of the conditions required for avoiding an external crisis. With this objective, a dynamic Kaleckian model is presented focusing on the stability of the external debt to capital ratio. The main conclusion is that policy makers should monitor closely the evolution of the real exchange rate in order to make compatible the inflation target regime with external stability.

Política fiscal anticíclica, crise financeira internacional e crescimento econômico no Brasil

This study analyzes the long run equilibrium relationship and causality between economic growth and public expenditure in Brazil covering the period 1980-2008. The empirical results of the Granger causality test in a multivariate framework have shown up the importance of public investments not only to face the adverse effects of the international financial crisis, but also in stimulating the economic growth. Also, the results indicate the need of controlling the growing path of other current expenditure, social security and public debt.

Investment in the Brazilian economy during the crisis

In this short article, it is analyzed as to whether financial flows and credit concessions explain the behavior of investment in the Brazilian economy during the 2008 crisis. Beyond the importance of demand, changes in expectations seem to be an important source of instability in investment and, as a consequence, in the economy.

Germany's socio-economic model and the Euro crisis

Germany's socio-economic model, the "social market economy", was established in West Germany after World War II and extended to the unified Germany in 1990. During a prolonged recession after the adoption of the Euro in 1998, major reforms (Agenda 2010) were introduced which many consider as the key of Germany's recent success. The reforms had mixed results: employment increased but has consisted to a large extent of precarious low-wage jobs. Growth depended on export surpluses based on an internal real devaluation (low unit labour costs) which make Germany vulnerable to global recessions as in 2009. Overall inequality increased substantially.