infonet-economy

We develop a simple macroeconomic model with extreme financial frictions (no credit markets) and show that poverty traps can emerge even in the absence of leverage. In our model, farmers produce fruit by renting land from landlords. Crops are exposed to aggregate shocks (weather risk). To guarantee themselves a positive consumption level even after a bad crop, farmers store fruit as…

This paper develops a novel and highly efficient numerical algorithm for the gap risk-adjusted valuation of leveraged certificates. The existing literature relies on Monte Carlo simulations, which are not fast enough to be used in a market making environment. This is because issuers need to compute thousands of price updates per second. By valuing leveraged certificates as multi-…

In this paper we analyse the extent to which perceptions of the government’s role in the economic crisis impacted on the political behaviour of European citizens. This includes contentious political activities such as attending public meetings, participating in demonstrations, and joining strikes, but also electoral behaviour in the form of voting against the incumbent. We examine…