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    Two thorns of experience: financialisation in Iceland and Ireland

    Raza, H. and Gudmundsson, B. and Zoega, Gylfi and Kinsella, S. (2016) Two thorns of experience: financialisation in Iceland and Ireland. International Review of Applied Economics 30 (6), pp. 771-789. ISSN 0269-2171.

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    Abstract

    We explain the 2008 crisis in Iceland and Ireland with an emphasis on the role financialisation played in destabilising these countries’ economies. The two small open economies share similarities in that both countries had capital inflows before the crisis, ending with a sudden stop. However, the mechanisms of the crisis, which induced the capital flows, the factors that influenced them and their effects on the real economy differed due to differences in currency regimes and the response to the crises. We investigate the link between financialisation and the transmission channels of financialisation on the macroeconomy, using ARDL methodology. Finally, we suggest policy prescriptions to limit the scale and scope of similar crises in the future while highlighting the institutional differences between the two economies.

    Metadata

    Item Type: Article
    Keyword(s) / Subject(s): Capital flows, financialisation, sudden stops, small open economies, currency regime
    School: Birkbeck Schools and Departments > School of Business, Economics & Informatics > Economics, Mathematics and Statistics
    Research Centre: Applied Macroeconomics, Birkbeck Centre for
    Depositing User: Administrator
    Date Deposited: 10 Nov 2016 08:58
    Last Modified: 07 Dec 2016 14:54
    URI: http://eprints.bbk.ac.uk/id/eprint/15970

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