Mark L. J. Wright Federal Reserve Bank of Minneapolis haldol antipsychotic Research Division

Mark L. J. Wright is senior vice president and director of research at haldol antipsychotic the federal reserve bank of minneapolis. In this role, he oversees key research efforts at the minneapolis fed and haldol antipsychotic advises the bank’s president on monetary policy and related matters. Prior to coming to minneapolis, wright was a senior economist and research advisor in the haldol antipsychotic economic research department at the federal reserve bank of chicago.

Wright has been an associate professor at the university of haldol antipsychotic california, los angeles, and an assistant professor at stanford university. He has been an economist and advisor to the reserve haldol antipsychotic bank of australia and the federal reserve banks of san haldol antipsychotic francisco and minneapolis, as well as an instructor at the IMF institute. He is currently a faculty research fellow of the national haldol antipsychotic bureau of economic research and serves on the editorial boards haldol antipsychotic of the journal of international economics, economics letters, and the journal of monetary economics.

Wright received a bachelor of economics (with first class honours) from the university of sydney, australia, and an M.A. And a ph.D. In economics from the university of chicago. His research examines the macroeconomics of developing countries, with a specific focus on their tendency to be prone haldol antipsychotic to international financial crises. Much of his recent work has been devoted to sovereign haldol antipsychotic default and the process by which sovereign debts are restructured.

Consider a sovereign who must obtain agreement with all creditors haldol antipsychotic in order to realize a gain from re-entering world capital markets. A simple game of settlement is developed to reflect strategic haldol antipsychotic interaction between creditors in this environment. Payoffs to creditors depend only on the rank-order in which they settle and the solution concept is haldol antipsychotic markov-perfect equilibrium. This generates an extremely simple and tractable solution under which haldol antipsychotic delay depends a comparison between the immediate payoff and the haldol antipsychotic average over payoffs going forward. The solution can generate sequences of cascade and delay observed haldol antipsychotic in practice. Comparative dynamics, the effect of increasing the number of creditors and the haldol antipsychotic impact on delay of secondary markets are analyzed. We derive the empirical distribution of delay implied by the haldol antipsychotic model for comparison to the observed distribution of delays in haldol antipsychotic the data. Finally, we derive predictions for the time path of settlements within haldol antipsychotic a given sovereign debt restructuring as a function of the haldol antipsychotic motives for creditors to holdout, and compare these predictions with data on the ongoing negotiations haldol antipsychotic to restructure argentina’s debts.

The stock of sovereign debt is typically measured at face haldol antipsychotic value. Defined as the undiscounted sum of future principal repayments, face values are misleading when debts are issued with different haldol antipsychotic contractual forms or maturities. In this paper, we construct alternative measures of the stock of external sovereign haldol antipsychotic debt for 100 developing countries from 1979 through 2006 that haldol antipsychotic correct for differences in contractual form and maturity. We show that our alternative measures: (1) paint a very different quantitative, and in some cases also qualitative, picture of the stock of developing country external sovereign debt; (2) often invert rankings of indebtedness across countries, which historically defined eligibility for debt forgiveness; (3) indicate that the empirical performance of the benchmark quantitative model haldol antipsychotic of sovereign debt deteriorates by roughly 50% once model-consistent measures of debt are used; (4) show how the spread of aggregation clauses in debt contracts haldol antipsychotic that award creditors voting power in proportion to the contractual haldol antipsychotic face value may introduce inefficiencies into the process of restructuring haldol antipsychotic sovereign debts; and (5) illustrate how countries have manipulated their debt issuance to meet haldol antipsychotic fiscal targets written in terms of face values.

Financial crises in emerging market countries appear to be very haldol antipsychotic costly: both output and a host of partial welfare indicators decline haldol antipsychotic dramatically. The magnitude of these costs is puzzling both from an haldol antipsychotic accounting perspective – factor usage does not decline as much as output, resulting in large falls in measured productivity – and from a theoretical perspective. With the aim of resolving this puzzle, we present a framework that allows us to do the haldol antipsychotic following. First, we account for changes in a country’s measured productivity during a financial crisis as the result haldol antipsychotic of changes in the underlying technology of the economy, the efficiency with which resources are allocated across sectors, and the efficiency of the resource allocation within sectors, driven both by reallocation amongst existing plants and by entry haldol antipsychotic and exit. Second, we measure the change in the country’s welfare resulting from changes in productivity, government spending, the terms of trade, and a country’s international investment position. We apply this framework to the argentine crisis of 2001 haldol antipsychotic using a unique establishment level dataset and we find that haldol antipsychotic more than half of the, roughly, 10 percent decline in measured total factor productivity can be haldol antipsychotic accounted for by deteriorations in the allocation of resources both haldol antipsychotic across and within sectors. We measure the decline in welfare to be of the haldol antipsychotic order of one-quarter of one year’s gross domestic product.

Presents new empirical results on the differences in private sovereign haldol antipsychotic debt-restructuring outcomes across debtor countries in different regions and at haldol antipsychotic different levels of development. Restructuring sovereign debt is very time consuming, and ineffective at preserving the value of private creditors’ claims or reducing the level of indebtedness to private creditors haldol antipsychotic of defaulting countries. Data on 90 defaults and 73 renegotiations between 1989 and haldol antipsychotic 2004 indicate that the time taken to complete a private haldol antipsychotic debt restructuring and the size of creditor losses are greater haldol antipsychotic for low-income countries, in particular in sub-saharan africa, than for middle-income countries. Despite private creditor “haircuts” averaging about 38 percent, poor countries tend to exit from defaults more indebted to haldol antipsychotic private creditors than when they entered. Although recent theory can explain the magnitude of delays observed haldol antipsychotic in the data, it has less to say about which aspects of the haldol antipsychotic debt-restructuring process lead to large increases in indebtedness to private haldol antipsychotic creditors in low-income countries.

This paper develops a tractable human capital model with limited haldol antipsychotic enforceability of contracts. The model economy is populated by a large number of haldol antipsychotic long-lived, risk-averse households with homothetic preferences who can invest in risk-free physical capital and risky human capital. Households have access to a complete set of credit and haldol antipsychotic insurance contracts, but their ability to use the available financial instruments is haldol antipsychotic limited by the possibility of default (limited contract enforcement). We provide a convenient equilibrium characterization that facilitates the computation haldol antipsychotic of recursive equilibria substantially. We use a calibrated version of the model with stochastically haldol antipsychotic aging households divided into nine age groups. Younger households have higher expected human capital returns than older haldol antipsychotic households. According to the baseline calibration, for young households less than half of human capital risk haldol antipsychotic is insured and the welfare losses due to the lack haldol antipsychotic of insurance range from 3 percent of lifetime consumption (age 40) to 7 percent of lifetime consumption (age 23). Realistic variations in the model parameters have non-negligible effects on equilibrium insurance and welfare, but the result that young households are severely underinsured is haldol antipsychotic robust to such variations.

Since 1950, the economies of east asia grew rapidly but received little haldol antipsychotic international capital, while latin america received considerable international capital even as their haldol antipsychotic economies stagnated. The literature typically explains the failure of capital to flow haldol antipsychotic to high growth regions as resulting from international capital market haldol antipsychotic imperfections. This paper proposes a broader thesis that country-specific distortions, such as domestic labor and capital market distortions, also impact capital flows. We develop a DSGE model of asia, latin america, and the rest of the world that features an open-economy business cycle accounting framework to measure these domestic and haldol antipsychotic international distortions, and to quantify their contributions to international capital flows. We find that domestic distortions have been the predominant drivers haldol antipsychotic of international capital flows, and that the general equilibrium effects of these distortions are haldol antipsychotic very large. International capital market distortions also matter, but less so.

We use data from the survey of consumer finance and haldol antipsychotic survey of income program participation to show that young households haldol antipsychotic with children are under-insured against the risk that an adult member of the haldol antipsychotic household dies. We develop a tractable macroeconomic model with human capital risk, age-dependent returns to human capital investment, and endogenous borrowing constraints due to the limited pledgeability of haldol antipsychotic human capital (limited contract enforcement). We show analytically that, consistent with the life insurance data, in equilibrium young households are borrowing constrained and under-insured against human capital risk. A calibrated version of the model can quantitatively account for haldol antipsychotic the life-cycle variation of life-insurance holdings, financial wealth, earnings, and consumption inequality observed in the US data. Our analysis implies that a reform that makes consumer bankruptcy haldol antipsychotic more costly, like the bankruptcy abuse prevention and consumer protection act of haldol antipsychotic 2005, leads to a substantial increase in the volume of both haldol antipsychotic credit and insurance.

The stock of sovereign debt is typically measured at face haldol antipsychotic value. Defined as the undiscounted sum of future principal repayments, face values are misleading when debts are issued with different haldol antipsychotic contractual forms or maturities. In this paper, we construct alternative measures of the stock of external sovereign haldol antipsychotic debt for 100 developing countries from 1979 through 2006 that haldol antipsychotic correct for differences in contractual form and maturity. We show that our alternative measures: (1) paint a very different quantitative, and in some cases also qualitative, picture of the stock of developing country external sovereign debt; (2) often invert rankings of indebtedness across countries, which historically defined eligibility for debt forgiveness; (3) indicate that the empirical performance of the benchmark quantitative model haldol antipsychotic of sovereign debt deteriorates by roughly 50% once model-consistent measures of debt are used; (4) show how the spread of aggregation clauses in debt contracts haldol antipsychotic that award creditors voting power in proportion to the contractual haldol antipsychotic face value may introduce inefficiencies into the process of restructuring haldol antipsychotic sovereign debts; and (5) illustrate how countries have manipulated their debt issuance to meet haldol antipsychotic fiscal targets written in terms of face values.

Negotiations to restructure sovereign debts are protracted, taking on average almost 8 years to complete. In this paper we construct a new database (the most extensive of its kind covering ninety recent sovereign haldol antipsychotic defaults) and use it to document that these negotiations are also haldol antipsychotic ineffective in both repaying creditors and reducing the debt burden haldol antipsychotic countries face. Specifically, we find that creditor losses average roughly 40 per-cent, and that the average debtor exits default more highly indebted haldol antipsychotic than when they entered default. To explain this apparent large inefficiency in negotiations, we present a theory of sovereign debt renegotiation in which haldol antipsychotic delay arises from the same commitment problems that lead to haldol antipsychotic default in the first place. A debt restructuring generates surplus for the parties at both haldol antipsychotic the time of settlement and in the future. However, a creditor’s ability to share in the future surplus is limited haldol antipsychotic by the risk that the debtor will default on the haldol antipsychotic settlement agreement. Hence, the debtor and creditor find it privately optimal to delay haldol antipsychotic restructuring until future default risk is low, even though delay means some gains from trade remain unexploited. We show that a quantitative version of our theory can haldol antipsychotic account for a number of stylized facts about sovereign default, as well as the new facts about debt restructurings that haldol antipsychotic we document in this paper. Finally, we argue that our findings shed light on the existence haldol antipsychotic of delays in bargaining in a wider range of contexts.

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