Antu Panini Murshid

Growth from International Capital Flows: The Role of Volatility Regimes

Recent commentary has downplayed the growth dividend from international financial integration, highlighting the possibly negative correlation between capital inflows and long-run growth. This paper presents new evidence consistent with standard economic theory and a more benign interpretation of cross-border private capital flows. The key observation is that a country’s growth volatility changes over time. With volatility below a threshold, an inflow of foreign capital has promoted growth. However, during periods of volatile growth, more flows have been associated with slower growth. Volatility levels and changes reflect an interaction of domestic production and institutional structures with global factors.

Mitigating the Growth-Effects of Inflation through Financial Development

This paper examines the growth-effects of inflation at alternative stages of financial development. We propose an endogenous growth model where intermediated savings generate capital. Informational problems cause banks to ration credit and hold liquid assets offering (real) returns that vary inversely with inflation. Inflation therefore acts like a tax on capital accumulation. However financial development lessens credit-rationing, which reduces the demand for these liquid assets and softens the incidence of the inflation tax. Sizeable and statistically significant interactions between inflation and measures of financial development in cross-country and panel regressions provide empirical support for our model.

Analyzing Catastrophic Terrorist Events with Applications to the Food Industry

This landmark book covers a range of issues concerning the consequences of terrorist attacks. Beginning with a discussion of new policies and strategies, it then delves into specific areas of concern, modeling a range of possible scenarios and ways to mitigate or pre-empt damages.

Is the Tail Wagging the Dog? What is the Risk of Catastrophic Terrorism?

This paper models the stochastic behavior of large-scale terrorist events using extreme value methods. We utilize a unique dataset composed of roughly 24,000 observations. These data provide a rich description of domestic and international terrorism between 1968 and 2005. Currently a credible worst-case scenario involves the loss of between 5,000 and 10,000 lives. However, the return time for events of this magnitude is shortening every year. Today the primary threat is from conventional weapons rather than from chemical, biological and/or radionuclear (CBRN) weapons. However, pronounced tails in the distribution of CBRN incidents suggests that this threat cannot be dismissed.

Echoes from the Past: Are Global Financial Crises Reasserting Themselves?

This study compares the incidence of currency crises across two periods-the pre-World War I era (1880-1913), and the post Bretton Woods period (1975-2000). Emphasis is placed on crises that were global in nature. An index of global stress was constructed as a common component in country-specific indexes of exchange market pressure. The incidence of global crises was then obtained by fitting a probabilistic model to the data generating process underlying extreme values of this index. The evidence suggests that while overall the crisis-incidence has been no lower, and may have even been higher, in the recent period, the incidence of global crises has been significantly lower.