Financial economic policy in times of crisis and beyond
Article Type: Editorial From: Journal of Financial Economic Policy, Volume 1, Issue 3
The worst global financial crisis that has occurred since the Great Depression more than amply demonstrates the importance of developing good financial economic policies. Countries around the world are now trying to understand what caused the crisis and what lessons should be drawn from it. This will be an ongoing process that will draw upon a wide range of expertise in many different areas of finance and economics. The outcome hopefully will be the implementation of a better set of policies in countries that will lessen the likelihood of such a widespread and devastating crisis from occurring again.
Editorial policy
As new editors for the journal, it is our goal to insure that articles published represent meaningful research using sound methodology and theory. We anticipate articles from a wide geographical area as well as from a range of topics.
The editorial policy of this journal certainly is to encourage the submission of manuscripts on a range of topics with resulting policy implications whether such policies be governmental or corporate policies. With the pressing issues facing countries with respect to financial crises, papers relating to advancing our knowledge of the causes of financial crises and appropriate reforms to minimize, if not eliminate, their occurrence are especially welcome. Our editorial view is also to encourage the submission of manuscripts that go beyond directly focusing on crises and instead more broadly address the entire spectrum of topics relating to financial economic policy. Given that policy issues themselves are multifaceted, the journal will accommodate a variety of methodological approaches, incorporating to varying degrees theory and empirics from a range of disciplines. But their common theme will be to advance sound economic and financial policies worldwide. We also plan to offer several special issues from time to time that will gather a more focused set of research papers on topics of relevancy.
To meet our goal of a high quality journal, we will need strong papers and also individuals willing to serve as referees on submitted manuscripts. Just as we all want timely and sound reviews on our paper, we hope that people will respond favorable when asked to serve as reviewers. We will rely of course, on the judgment of reviewers and also our view of the manuscripts and whether they are appropriate for the journal.
Papers in this issue
We are pleased to publish four articles in this issue of the journal. The first paper by Andreas Kern and Christian Fahrholz focuses on the linkages between financial-market governance and international trade. In doing so, he provides a discussion of several possible causes of the financial crisis. One of his major conclusions is that liquidity available in financial markets expanded well beyond a sustainable level and that this excess liquidity contributed to the financial boom and bust in several mature economies.
The second paper, by Carlos A. Ulibarri, Ionut Florescu and Joel M. Eidsath examines short selling and the policy responses taken to curtail this activity during the recent financial crisis. Whether actions should be taken to limit short selling is a controversial topic and certainly of widespread interest to investors. The authors provide a thorough discussion to support their view that short selling merits only limited regulation.
W. Adrián Risso and Edgar J. Sánchez Carrera, in the third paper,assess the relationship between inflation and economic growth in Mexico. Using an econometric model, they find that inflation beyond a 9 percent rate tends to hinder economic growth and development. Their findings are clearly relevant to Mexico’s central bank actions as well as those in other countries as efforts are made to balance inflation and economic growth coming out of the global financial crisis.
The fourth and last paper in this issue, by Bruno Funchal and Mateus Clovis,examines changes in bankruptcy law on a firm’s financial decisions. Using information from bankruptcy reforms in Brazil, they conclude that by enhancing the rights of creditors, a firm is able to increase the use of debt in its capital structure. This work provides a nice example of how changes in governmental policies or laws can importantly change incentives and thus corporate behavior and financial policies.
James Barth, John JaheraCo-Editors
