Using crises, feedback, and fading for online task design

Resumen basado en el de la publicaci??n

Self-Fulfilling Crises in the Eurozone: An Empirical Test. CEPS Working Document No. 366, 22 June 2012

This paper tests the hypothesis that government bond markets in the eurozone are more fragile and more susceptible to self-fulfilling liquidity crises than in stand-alone countries. We find evidence that a significant part of the surge in the spreads of the PIGS countries (Portugal, Ireland, Greece and Spain) in the eurozone during 2010-11 was disconnected from underlying increases in the debt-to-GDP ratios and fiscal space variables, and was the result of negative self-fulfilling market sentiments that became very strong since the end of 2010. We argue that this can drive member countries of the eurozone into bad equilibria. We also find evidence that after years of neglecting high government debt, investors became increasingly worried about this in the eurozone, and reacted by raising the spreads. No such worries developed in stand-alone countries despite the fact that debt-to-GDP ratios and fiscal space variables were equally high and increasing in these countries.

Confronting social defence mechanisms: avoiding disorganization during crises

Crises cause social disturbances within their host organisation and the patterns of interpersonal ties that emerge are an important determinant of crisis management efficiency. In this article, social network analysis is used within a construction project context, to demonstrate that efficient crisis management depends upon the design and maintenance of an appropriate social fabric. However, crises have defence mechanisms that make management difficult by inducing forces that encourage people to pursue inappropriate social ties. Purposeful social intervention is therefore an essential part of the crisis management process to confront and avoid disorganisation.

Do IMF and World Bank programs induce government crises? an empirical analysis

We examine whether and under what circumstances World Bank and International Monetary Fund (IMF) programs affect the likelihood of major government crises. We find that crises are, on average, more likely as a consequence of World Bank programs. We also find that governments face an increasing risk of entering a crisis when they remain under an IMF or World Bank arrangement once the economy's performance improves. The international financial institution's (IFI) scapegoat function thus seems to lose its value when the need for financial support is less urgent. While the probability of a crisis increases when a government turns to the IFIs, programs inherited by preceding governments do not affect the probability of a crisis. This is in line with two interpretations. First, the conclusion of IFI programs can signal the government's incompetence, and second, governments that inherit programs might be less likely to implement program conditions agreed to by their predecessors.

Economic crises in England, 1270-1520: a statistical approach

The chapter examines how far medieval economic crises can be identified by analysing the residuals from a simultaneous equation model of the medieval English economy. High inflation, falls in gross domestic product and large intermittent changes in wage rates are all considered as potential indicators of crisis. Potential causal factors include bad harvests, wars and political instability. The chapter suggests that crises arose when a combination of different problems overwhelmed the capacity of government to address them. It may therefore be a mistake to look for a single cause of any crisis. The coincidence of separate problems is a more plausible explanation of many crises.

Breaching the social contract: crises of democratic representation and patterns of extreme right party support

Why has the extreme right Greek Golden Dawn, a party with clear links to fascism experienced a rise defying all theories that claim that such a party is unlikely to win in post-WWII Europe? And, if we accept that economic crisis is an explanation for this, why has such a phenomenon not occurred in other countries that have similar conducive conditions, such as Portugal and Spain? This article addresses this puzzle by (a) carrying out a controlled comparison of Greece, Portugal and Spain and (b) showing that the rise of the extreme right is not a question of intensity of economic crisis. Rather it is the nature of the crisis, i.e. economic versus overall crisis of democratic representation that facilitates the rise of the extreme right. We argue that extreme right parties are more likely to experience an increase in their support when economic crisis culminates into an overall crisis of democratic representation. Economic crisis is likely to become a political crisis when severe issues of governability impact upon the ability of the state to fulfil its social contract obligations. This breach of the social contract is accompanied by declining levels of trust in state institutions, resulting in party system collapse.