Mortgage-backed securities have played a major role in the financial crisis and aren’t very popular as a result. This column documents macroeconomic benefits of these instruments, showing that economies with more developed markets for securitised mortgage debt share more consumption risk with other economies.
In numerous poor or stagnating countries, politicians are ineffective and corrupt, public goods are under-provided and public policies confer rents to privileged élites, law enforcement is inadequate, and moral hazard is widespread inside public and private organisations. There is not just one institutional failure. Typically, the countries or regions that fail in one dimension also fail in many other aspects of collective behaviour.
One of the main challenges of current research in economic growth and development is identifying the mechanism through which distant political and economic history shapes the functioning of current institutions. The author, a professor of economics at Bocconi University, claims that an important channel for this shaping is individuals’ morality (defined as individual values and convictions about the scope of application of norms of good conduct). It is an important factor in economic outcomes.
Aid critics have recently been blaming aid as the source of Africa’s poverty. This column explains how Africa has long been struggling with rural poverty, tropical diseases, illiteracy, and lack of infrastructure and that the right solution is to help address these critical needs through transparent and targeted public and private investments. This includes both more aid and more market financing. It refers to D. Moyo and her recent book “Dead Aid: Why Aid is Not Working and How there is a Better Way for Africa” see http://www.huffingtonpost.com/dambisa-moyo/aid-ironies-a-response-to_b_207772.html
There is a risk that empirically dubious but emotionally attractive interpretations of the financial crisis, which condemn markets and call for more statism, could gain ground.
Easter Monday 2009 marked the 28th anniversary of the martyrdom of Monseñor Oscar Romero, Archbishop of San Salvador, who once said, ‘as a Christian, I do not believe in death without resurrection. If they kill me I will rise again in the people of El Salvador.’ Rodolfo Cardenal SJ writes about the legacy of Archbishop Romero – very much alive in the Church today.
Is there a formula—some mix of love, work, and psychological adaptation—for a good life? For 72 years, researchers at Harvard have been examining this question, following 268 men who entered college in the late 1930s through war, career, marriage and divorce, parenthood and grandparenthood, and old age. Here, for the first time, a journalist gains access to the archive of one of the most comprehensive longitudinal studies in history. Its contents, as much literature as science, offer profound insight into the human condition—and into the brilliant, complex mind of the study’s longtime director, George Vaillant.
Bank bonuses have been blamed for contributing to the crisis, and regulators and politicians are now demanding changes in compensation arrangements. Most of these calls are based on a misconception of the nature of financial risk, an inflated view of the efficacy of risk models, and an incorrect view of the incentive issues facing financial institutions. This column proposes reforms that would discipline senior managers by exposing them to the dangers of junior managers’ risk taking.
The Salvation Army NZ has released a thought-provoking discussion paper exploring consumerism and what we feel is rightly ours. It focuses on the concept of entitlement and the inherent dangers of framing entitlement in terms of our desires and inflated expectations. The Rainbow paper follows on from an earlier paper on Economic Elephants and the theology of enough.