Browsing by Subject "H12"

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  • Ru, Hong; Yang, Endong; Zou, Kunru (2020)
    BOFIT Discussion Papers 15/2020
    This paper documents a strong delayed response to COVID-19, which is caused by the SARS-CoV2 virus in countries that did not encounter the SARS disease in 2003. The SARS outbreak was caused by a similar virus, SARS-CoV-1. Individuals in countries that developed SARS infections in 2003 search more intensively for COVID-19-related information on Google during the first outbreak of COVID-19 in Wuhan, China, in late January 2020. Governments in countries that have not experienced SARS respond significantly slower in implementing containment measures to combat COVID-19 than countries that have experienced SARS. Furthermore, the timely responses of individuals and governments are more pronounced in countries that reported deaths caused by SARS, which left deeper imprints. Consequently, COVID-19 case numbers and mortalities have been substantially higher in countries that did not experience SARS deaths. Our findings suggest that the imprint of the early experience of similar viruses is a fundamental mechanism underlying timely responses to COVID-19.
  • Ambrocio, Gene; Juselius, Mikael (2020)
    BoF Economics Review 2/2020
    The main problem facing policymakers during the corona virus pandemic is how to mitigate its humanitarian and economic costs. Doing so invariably involves trading off some costs against others as well as short-term against longer-term consequences. We provide an overview of economic literature that is relevant for understanding these trade-offs in the context of the current pandemic. We also discuss a range of fiscal measures that can be adopted with the aim of achieving the preferred trade-offs at lowest cost.
  • Gehrig, Thomas; Iannino, Maria Chiara (2018)
    Bank of Finland Research Discussion Papers 16/2018
    This paper analyses the evolution of the safety and soundness of the European banking sector during the various stages of the Basel process of capital regulation. In the first part we document the evolution of various measures of systemic risk as the Basel process unfolds. Most strikingly, we find that the exposure to systemic risk as measured by SRISK has been steeply rising for the highest quintile, moderately rising for the second quintile and remaining roughly stationary for the remaining three quintiles of listed European banks. This observation suggests that the Basel process has succeeded in containing systemic risk for the majority of European banks but not for the largest and most risky institutions. In the second part we analyze the drivers of systemic risk. We find compelling evidence that the increase in exposure to systemic risk (SRISK) is intimately tied to the implementation of internal models for determining credit risk as well as market risk. Based on this evidence, the sub-prime crisis found especially the largest and more systemic banks ill-prepared and lacking resiliency. This condition has even aggravated during the European sovereign crisis. Banking Union has not restored aggregate resiliency to pre-crises levels. Finally, low interest rates considerably a ect the contribution to systemic risk for the safer banks.
  • Li, Weijia; Roland, Gérard; Xie, Yang (2020)
    BOFIT Discussion Papers 5/2020
    How do corruption and the state apparatus interact, and how are they connected to the political and economic dimensions of state capacity? Motivated by historians' analysis of powerful empires, we build a model that emphasizes the corrosive effect of corruption on state power. Under general assumptions about fat-tailed risk, we show that, if fiscal capacity is strong, then the optimal response for the head of the state apparatus will be an endogenous lexicographic rule whereby local corruption is maintained at such a level that no erosion of state power is tolerated. Comparative statics shows the impacts of additional risk of crisis on corruption tolerance as well as the complementarity between personalistic rule and corruption. Implications of corruption at the head of the state apparatus are also analyzed. If fiscal capacity is not sufficiently strong, however, the state will have to over-tolerate corruption to retain its affiliates, risking its control in crises. Our model predicts that the correlation between state's political stability and corruption is non-monotonic across different levels of fiscal capacity, and this prediction is robustly consistent with recent cross-country panel-data.