Archive for May, 2016

How Venezuela’s socialist dream collapsed into a nightmare

How Venezuela’s socialist dream collapsed into a nightmare

This article was first published on Vox on May 26, 2016. Venezuela is in the midst of a stunning social, political, and economic collapse. The country of 30 million people is facing dire food and medicine shortages, frequent power outages, serious political unrest, the world’s highest inflation rate, rampant violentRead More

What Economists Do By Robert Lucas

What Economists Do By Robert Lucas

Economists have an image of practicality and worldliness not shared by physicists and poets. Some economists have earned this image. Others –myself and many of my colleagues here at Chicago– have not. I’m not sure whether you will take this as a confession or a boast, but we are basically story-tellers, creators ofRead More

Self-fullfilling Profecies in Sovereign Debt Markets

Self-fullfilling Profecies in Sovereign Debt Markets

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This is based on the Minneapolis Fed Working Paper 723, “Sovereign Default: The Role of Expectations”, by Joao Luiz Ayres, Gaston Navarro,  Juan Pablo Nicolini  and Pedro Teles. Bonds issued by sovereign governments are special since there is no collateral posed and there are no international courts that can makeRead More