How China is Managing Capital Flows – and why Jayati Ghosh

The global financial media are always on the lookout for signs of an impending financial crisis in China – and the dark prognostications about the future made by several external observers relate to both internal and external financial flows. But there are reasons to believe that both concerns may be overplayed, and that what is occurring especially with respect to cross-border flows is a much more complex process reflecting a medium-term plan of the Chinese state, in accordance with its much more assertive role in the global scene. There has been much discussion on rising internal debt levels, with analysts…

Trapped in a Recession C.P. Chandrasekhar

When the recently held annual meetings of the IMF and the World Bank ended, the only news to report was that confusion and disagreement afflicts the leaders and institutions charged with jointly managing the international economy. The absence of certainty and agreement was specially visible with respect to one issue: whether governments should revert to using fiscal policy measures and not just monetary policy initiatives to revive a global economy poised to slip into another deep recession. Years of “quantitative easing’ or injection of liquidity into the system through bond purchases by the US Fed, and similar moves elsewhere in…

Fragile Foundations: Foreign capital and growth after liberalisation C.P. Chandrasekhar

The shift from debt-financed public expenditure to debt-financed private expenditure-led growth in India has resulted in increased dependence on foreign capital and vulnerability. Fragile_Foundations (Download the full text in PDF format) (This article was originally published in the Social-Scientist dated Jan-Feb 2013.)

Is Global Finance Finally Shrinking? Jayati Ghosh

It is obvious that the recent boom in global capitalism had witnessed massive over-extension of finance. What has been described as “financialisation” reflected not only the ever-greater penetration of finance capital into more activities of the real economy and involvement in critical markets such as those for commodity futures that affect traded prices of food and fuel, but also huge and volatile movements of capital across national borders. By 2007, global stocks of financial assets (both equity and debt stocks) amounted to $206 trillion.  This meant that financial assets were more than 4 times the maximal estimate of GDP in…

The Endless Eurozone Crisis, Where Do We Stand? A Classical-Kaleckian Overview Sergio Cesaratto

This paper reviews the main causes of the Euro Zone financial crisis and argues that the prevailing crisis resolution philosophy resembles the original deflationary Euro-bias. Endless_Eurozone_Crisis (Download the full text in PDF format) (This article was originally published in The Quaderni del Dipartimento di Economia Politica e Statistica (Department of Economics and Statistics Working Papers) in February 2013.)

Financial Convergence in Asia C.P. Chandrasekhar and Jayati Ghosh

The recent Asian experience with financial convergence suggests that financial proliferation largely facilitates new lines of business in financial services and affects the real economy more from the demand side through the debt-financed household expenditure it promotes. Thus excessive exposure to retail markets becomes a source of fragility in these countries just as it did in the developed countries. Asia (Download the full text in PDF format) (This article was originally published in the Business Line on 3 September 2012)

European Banks and Asia C.P. Chandrasekhar and Jayati Ghosh

European banks are being forced to take a haircut to deal with the region's crisis. Given their greater role in total international funding and the significant exposure of Asian financial systems to global capital, this raises concerns about the likely impact that the European banking crisis would have on Asia. European_Banks (Download the full text in PDF format) (This article was originally published in the Business Line, on November 14, 2011)