Susan K. Schroeder

The Underpinnings of Country Risk Assessment

This paper surveys the history and current status of country risk assessment. The motivation is to understand why it is that country risk assessors have such a poor track record in anticipating the onset of financial crises. The development of the field reflects changes in the composition of international capital flows. These changes have confounded a definition of country risk, especially if a definition is centered on a particular event. It is then argued that the field has reached an impasse, and this impasse is related to the methods of abstraction and the current crisis of vision within the science of economics. This crisis of vision, as it pertains to theories of financial crises, has led to increased reliance on quantitative methods in the field of country risk. The paper concludes by proposing a new direction for the field, the first step towards which is to recognize that the object of country risk assessment is not to monitor for a particular event or symptom of financial crisis, but, rather, to monitor for a particular state of the economy. Copyright

Defining and detecting financial fragility: New Zealand's experience

Purpose - The purpose of this study is to investigate why “financial fragility” carries different definitions in the economic literature. This is a useful task as the detection of “financial fragility” depends, in part, upon how one defines it. According to Post Keynesian economists, financial fragility is a process that can culminate in financial instability (an event). For mainstream or New Keynesian economists, financial fragility has been traditionally defined as a state in which a shock can trigger instability. More recently, however, mainstream economists have recast their definition as a particular form of financial instability – an event. Each definition of financial fragility is intimately linked to the theoretical foundation upon which it rests. This carries important implications for the ability of policymakers to assess and manage the health of an economy. Design/methodology/approach - The different approaches to the definition and detection of financial fragility are compared using corresponding sets of indicators. Indicators for the Post Keynesian approach are derived from a simple cash-flow accounting framework, in the spirit of Hyman Minsky. The economy selected for study is New Zealand. Findings - According to the Post Keynesian approach, New Zealand has been in a financially fragile state for over three years, a period during which policymakers could have been creating ways to make New Zealand more resilient to the onset of instability. According to the New Keynesian approach, New Zealand may just now be experiencing fragility, giving policymakers much less time to react. Originality/value - This study traces the definitions of financial fragility to their underlying theoretical frameworks and draws the implications for the methods of detecting financial fragility.

The Influence of the Review of Radical Political Economics: Insights on Selected Key Articles

The Review of Radical Political Economics (RRPE) continues to offer cutting-edge contributions to radical political economics and, as such, is considered to be one of the leading journals for heterodox (nonmainstream) economics. The following mini-symposium reflects on three articles that were published by the RRPE during its, and Union for Radical Political Economics’ (URPE), first fifty years. These articles are examples of the RRPE’s seminal works that affected, and continue to affect, the literature of heterodox economics in various ways. The authors of these articles were asked to provide their reflections on them. This article provides a foundation for appreciating those contributions—both old and new.

Public Credit Rating Agency

Drawing upon the analyses in the previous chapters we now explore the “what ifs” of a national PCRA. The insights gleaned from the identification of functions and malfunctions, issues surrounding methods of assessing creditworthiness, the effectiveness of government, and regulatory capture are invoked to justify the existence, role(s) and the structure of a PCRA. What did we take away?

Challenging the Orthodoxy: The Contributions of Frank Stilwell to Political Economy

After more than 30 years of existence the neoliberal paradigm is being questioned as a viable approach to economic and social policies. A key question is, if it were to be replaced, what could it be replaced by? To date this is a question that has generated considerable debate without a definitive answer. However, what seems clear is that, broadly speaking, there are two possible paths—an even greater reliance on ‘free’ markets or a shift towards greater social cooperation.