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Real Versus Pseudo-International Systemic Risk: Some Lessons from History

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  • Michael D. Bordo
  • Bruce Mizrach
  • Anna J. Schwartz

Abstract

This paper considers the meaning of domestic and international systemic risk. It examines scenarios that have been adduced as creating systemic risk both within countries and among them. It distinguishes between the concepts of real and pseudo-systemic risk. We examine the history of episodes commonly viewed either as financial crises or as evidencing systemic risk to glean lessons for today. We also present some statistical evidence on possible recent systemic risk linkages between the stock markets of emerging countries. The paper concludes with a discussion of the lessons yielded by the record.

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Bibliographic Info

Paper provided by National Bureau of Economic Research, Inc in its series NBER Working Papers with number 5371.

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Date of creation: Dec 1995
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Publication status: published as Review of Pacific Basin Financial Markets and Policies, December 1996
Handle: RePEc:nbr:nberwo:5371

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  1. Michael Mussa & Morris Goldstein, 1993. "The integration of world capital markets," Proceedings - Economic Policy Symposium - Jackson Hole, Federal Reserve Bank of Kansas City, Federal Reserve Bank of Kansas City, pages 245-330.
  2. Gary Gorton & Richard Rosen, . "Banks and Derivatives," Rodney L. White Center for Financial Research Working Papers, Wharton School Rodney L. White Center for Financial Research 06-95, Wharton School Rodney L. White Center for Financial Research.
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  3. Benjamin M. Friedman, 1986. "Increasing indebtedness and financial stability in the United States," Proceedings - Economic Policy Symposium - Jackson Hole, Federal Reserve Bank of Kansas City, Federal Reserve Bank of Kansas City, pages 27-61.
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  11. Lawrence H. Summers & Hyman P. Minsky & Paul A. Samuelson & William Poole & Paul A. Volcker, 1991. "Macroeconomic Consequences of Financial Crises," NBER Chapters, in: The Risk of Economic Crisis, pages 135-182 National Bureau of Economic Research, Inc.
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  15. Campbell R. Harvey, 1994. "Conditional Asset Allocation in Emerging Markets," NBER Working Papers 4623, National Bureau of Economic Research, Inc.
  16. Henry Kaufman, 1986. "Debt: the threat to economic and financial stability," Proceedings - Economic Policy Symposium - Jackson Hole, Federal Reserve Bank of Kansas City, Federal Reserve Bank of Kansas City, pages 15-26.
  17. Grossman Richard S., 1993. "The Macroeconomic Consequences of Bank Failures under the National Banking System," Explorations in Economic History, Elsevier, Elsevier, vol. 30(3), pages 294-320, July.
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Cited by:
  1. Bordo, Michael D. & Schwartz, Anna J., 2000. "Measuring real economic effects of bailouts: historical perspectives on how countries in financial distress have fared with and without bailouts," Carnegie-Rochester Conference Series on Public Policy, Elsevier, Elsevier, vol. 53(1), pages 81-167, December.
  2. Yung Chul PARK & Yunjong WANG, 2001. "Reform Of The International Financial System And Institutions In Light Of The Asian Financial Crisis," G-24 Discussion Papers 12, United Nations Conference on Trade and Development.
  3. Martin Mayer, 1999. "Risk Reduction in the New Financial Architecture: Realities, Fallacies, and Proposals," Macroeconomics, EconWPA 9905003, EconWPA.
  4. John Kambhu & Til Schuermann & Kevin J. Stiroh, 2007. "Hedge funds, financial intermediation, and systemic risk," Economic Policy Review, Federal Reserve Bank of New York, Federal Reserve Bank of New York, issue Dec, pages 1-18.
  5. Michael Bordo, 2000. "Sound Money and Sound Financial Policy," Journal of Financial Services Research, Springer, Springer, vol. 18(2), pages 129-155, December.
  6. de Bandt, Olivier & Hartmann, Philipp, 2000. "Systemic Risk: A Survey," CEPR Discussion Papers, C.E.P.R. Discussion Papers 2634, C.E.P.R. Discussion Papers.
  7. Martin Mayer, 1999. "Risk Reduction in the New Financial Architecture: Realities, Fallacies, and Proposals," Economics Working Paper Archive wp_268, Levy Economics Institute.
  8. Michael D. Bordo & Anna J. Schwartz, 1996. "Why Clashes Between Internal and External Stability Goals End in Currency Crises, 1797-1994," NBER Working Papers 5710, National Bureau of Economic Research, Inc.
  9. Scot A. C. Gould & Stephen A. Naftilan & Sarkis J. Khoury & Danae J. Wright, . "Systemic Risk: A More Rigorous and Realistic Simulation," Claremont Colleges Working Papers, Claremont Colleges 2001-33, Claremont Colleges.
  10. Knight, Malcolm, 1998. "Developing Countries and the Globalization of Financial Markets," World Development, Elsevier, Elsevier, vol. 26(7), pages 1185-1200, July.
  11. Dicembrino, Claudio & Scandizzo, Pasquale Lucio, 2011. "Can portfolio diversification increase systemic risk? evidence from the U.S and European mutual funds market," MPRA Paper 33715, University Library of Munich, Germany.
  12. Marcel Fratzscher, 1998. "Why are currency crises contagious? A comparison of the Latin American Crisis of 1994–1995 and the Asian Crisis of 1997–1998," Review of World Economics (Weltwirtschaftliches Archiv), Springer, Springer, vol. 134(4), pages 664-691, December.
  13. George G. Kaufman, 1998. "Central banks, asset bubbles, and financial stability," Working Paper Series, Federal Reserve Bank of Chicago WP-98-12, Federal Reserve Bank of Chicago.
  14. Martin Mayer, . "Risk Reduction in the New Financial Architecture: Realities and Fallacies in International Financial Reform," Economics Public Policy Brief Archive ppb_56, Levy Economics Institute.
  15. Jose Antonio R. Tan, III, 1998. "Contagion effects during the Asian financial crisis: stock price data," Pacific Basin Working Paper Series, Federal Reserve Bank of San Francisco 98-06, Federal Reserve Bank of San Francisco.
  16. Alicia García Herrero & Pedro del Río, 2003. "Financial stability and the design of monetary policy," Banco de Espa�a Working Papers 0315, Banco de Espa�a.
  17. Alicia García Herrero & Pedro del Río López, 2003. "Implications of the design of monetary policy for financial stability," Macroeconomics, EconWPA 0304008, EconWPA.
  18. Michael Bordo & Anna Schwartz, 1996. "Why clashes between internal and external stability goals end in currency crises, 1797–1994," Open Economies Review, Springer, Springer, vol. 7(1), pages 437-468, March.
  19. Yung Chul Park & Yunjong Wang, 2002. "What Kind of International Financial Architecture for an Integrated World Economy?," Asian Economic Papers, MIT Press, MIT Press, vol. 1(1), pages 91-128.
  20. Scot A. C. Gould & Sarkis J. Khoury, . "Systemic Risk: Simulating Local Shocks To A Global System," Claremont Colleges Working Papers, Claremont Colleges 2003-02, Claremont Colleges.

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