international economics

Lectures on First Steps towards Understanding Macroeconomics, on Friday 4th May 2018 in AR Kemal Rm at PIDE, by Dr. Asad Zaman, VC PIDE. 1hr 20m Video Lecture( shorlink:

3100 word summary of lecture:

Read More


The existing international financial architecture, left over institutions from the Bretton Woods period, proved useless to prevent or warn against the 2007-2008 crisis, or even less, solve it. Only when a new presidential grouping (G20) meeting was called for in London in March 2009, the issues of how to coordinate countercyclical policies and inject resources into the economies were discussed. At that time, a UN high level Commission was created to propose reforms to the international financial architecture. The results of what became known as the Stiglitz Commission came to light in April 2010; the Commission’s recommendations were, however, shunned by some large UN member countries due to their rejection of the principle of global solutions for global problems. Indeed, some European countries and the US still insist on national solutions, that is on the use of local regulatory agencies in the international financial field.

Eight years have elapsed since the crisis emerged in 2007. There are no negative impact on the real sector as well as the financial sector is still being felt by leading financial institutions or Central Bank’s authorities. The major financial problems are dealt with at a national level in spite of being a global problem. Since 2010, the SEC has levied large fines against TBTF banks’ wrongdoings according to the definition of LIBOR, the commodity markets, the exchange markets and the fraudulent sale of collateralized debt obligations with credit risk approval from the three large American credit rating agencies; European regulators have done some of the same. Simultaneously, vulture funds attacked Argentina and made evident a nonsense of having the last creditor obtaining a better payment terms than the first one, breaking the usual understanding of the pari passu principle while a New York judge held the country hostage to his decisions. Finally all the G7 economies have come to reflect over 100% public debt on GDP ratios with only one approach to resolving this problem: austerity affecting economic growth, the price levels, and employment. As a consequence, debt indexes have increased sharply, depressing economic activity and prices.

From this background emerges the need for a new international financial architecture.
The conference, that is being organized by Oscar Ugarteche and Alicia Puyana,  focuses on the current global financial scenario and what appears as the new international financial architecture, which poses many questions that need to be addressed:

  • How did the crisis affect the structure of the financial sector in the different regions of the world? What kinds of provisions where implemented to manage the impact?
  • Has the financial crisis influenced the financial flows for productive sectors in the regions?
  • Have the regional financial architectures been adequately reformed after the crisis? Do they have any margin of autonomy to reform, or are they totally dependent on foreign banks and external funds?
  • Can vulture funds be considered as an element of the so-called new financial structure to prevent crises, or are they one more cause of instability?
  • Are the IMF and the available existing international reserves sufficient to prevent another major crisis?
  • Can the IMF be reformed, despite European and US reluctance to do so?
  • How should debt reduction mechanisms function in this new global scenario?
  • Are there lessons from the Latin American debt crisis of the 1980’s for Europe? Or is it a new type of crisis?
  • Are the austerity programs recently imposed on indebted countries an appropriate policy measures to prevent financial crisis, such as the one in 2008?

Papers falling within the broad topic of the conference as well as on related aspects that are not explicitly noted here are welcomed.

As the Chair of the Wea Conferences, I invite you all to submit papers and participate in the Discussion Forum.

For deadlines, guidelines and submission:

I have written a summary of the main arguments of Mian and Sufi in “House of Debt”. This book provides the answer to the question “How does macro-economics need to change, in light of the Global Financial Crisis?” This has been asked of many but none have given a satisfactory answer. Mian and Sufi analysis is to the GFC what Keynes was to the Great Depression — in fact Mian and Sufi provide the first satisfactory explanaton for both events.  My full length review is available from SSRN at:  Below I provide an excerpt from my review which gives the history of the Global Financial Crisis, linking it causally to the East Asian Crisis. Read More


The huge growth of deregulated finance has been associated to a new financial regime and great transformations in the pattern of economic growth. Looking backward, there has been a narrow relationship between the crisis of the post-war accumulation pattern, the evolution of the international monetary system and the process of financial deregulation. In fact, as Bello  warned, in the 1980s, Reaganism and structural adjustment were not successful attempts to overcome the post-war accumulation crisis. One decade later, the Clinton administration embraced globalization as an American strategy. First, this strategy aimed to accelerate the integration of production and markets by transnational corporations. Secondly, it aimed to create a multilateral system of global governance centered on the World Trade Organization, the International Monetary Fund and the World Bank.




Global liquidity, stimulated by the evolution of the American monetary policy since the early 1990s, favored the expansion of private capital flows and deepened the interconnections between national financial systems. The notion of a financial-led accumulation regime highlights that finance decisively shape a pattern of accumulation where low growth rates and a high degree of financial fragility have been observed. The growth of financial assets, generated by debt cycles, has included growing and sophisticated risk management practices. The financial expansion also proved to subordinate the pace of investment to financial commitments, enhanced deep international imbalances and reinforced macroeconomic volatility. In this scenario, financial capital has exercised control over social and economic structural forms in order to foster cycles of capital valorization, thanks to the centralized money at disposal.