Notes on "Political economy of a euro area banking crisis" (by Panicos O. Demetriades")

Political economy of a euro area banking crisis

By Panicos O. Demetriades

http://www.lse.ac.uk/fmg/workingPapers/specialPapers/PDF/SP245.pdf

A brief outline of the Cypriot banking crisis, its main ingredients, its timeline and its deeper political economy causes

too big to fail, too big to save and too big to regulate

Cyprus business model: growing contingent liability

bailing in shareholders, bond holders and uninsured depositors

eroded the independence of the central bank and brought the justice system under unprecedented political pressure

Notes on "Illiquidity and stock returns: cross-section and time-series effects" (Yakov Amihud)

Illiquidity and stock returns: cross-section and time-series effects"  
by Yakov Amihud

Not finished 

Notes on "Complexity in financial markets" (by Markus K. Brunnermeier and Martin Oehmke)

Complexity in financial markets
by Markus K. Brunnermeier and Martin Oehmke
https://www0.gsb.columbia.edu/faculty/moehmke/papers/Complexity.pdf

Complexity only matters when agents are boundedly rational.
Workable complexity is difficult

(not finished)

Notes on "Central bank communication and monetary policy"

Central bank communication and monetary policy

A survey of theory and evidence

By Alan S. Blinder, Michael Ehrmann, Marcel Fratzscher, Jakob De Haan and David-Jan Jansen

https://www.ecb.europa.eu/pub/pdf/scpwps/ecbwp898.pdf?380fa5b27a75abbce110013251f9afaf

Central bank communication -> create news and reduce noise

The four extreme cases when central bank communication matters: nonstationarity, the learning, non-rational expectation and asymmetric information between the public and the central bank

The three channels: direct effect of the overnight rate on the aggregate demand, direct effect on the expected future short rates, the direct effect of the short term changes in short rates on the expectations of the entire sequence of the future short rates 

There are limits to how much the information could be digested efficiently

The honest central bank talk is almost certain to coordinate beliefs in the right direction

What to communicate: objectives and strategy, policy decisions, the economic outlook, the path of future policy rates