Why do financial crises draw much attention from the public? Speculative attacks or turbulence in the foreign exchange markets make headlines in the news, but it is usually the consequence of the crises that interest people the most. More specifically, people tend to think that financial crises create negative impacts on the real economy, and that such economic turmoil can lead to political turmoil as witnessed in Indonesia during the Asian crisis of 1997-98. However, as Gupta, et al. (2000) and Angkinand and Ito (2004) show, it is not always the case that financial crises lead to output losses, but that financial crises can even lead an economy to experience an expansion. Regardless of what statistical analysis has found, the perception that financial crises lead to negative consequences on the real economy is quite prevalent.
While many researchers have attempted to theorize or empirically study what can contribute to the occurrence of a crisis, some have investigated the factors that can lead to crises with output losses (Bordo, et al. (2001), Glick and Hutchison (2001), Gupta, et al. (2000), Hutchison and Noy (2001, 2002a,b)). While macroeconomic or institutional factors have been investigated as possible contributors to the occurrence of a crisis or its output losses, capital controls have been also discussed as one of the main contributors (Glick and Hutchison (2001), Bordo, et al. (2001)). The discussion on the role of capital controls heightened especially during the Asian crisis. Krugman (1998) advocated implementing capital controls as an extraordinary policy for an extraordinary situation such as a financial crisis. In 1998, Malaysia’s prime minister M. Mahathir tightened capital controls in an attempt to insulate his country from negative waves from the Asian crisis.
One of the fundamental responsibilities of water and wastewater management is the establishment of continuing programs to insure the reliability and validity of analytical laboratory and field data gathered in water treatment and wastewater pollution control activities.
This handbook is addressed to laboratory directors, leaders of field investigations, and other personnel who bear responsibility for water and wastewater data. Subject matter of the handbook is concerned primarily with quality control (QC) for chemical and biological tests and measurements. Chapters are also included on QC aspects of sampling, microbiology, biology, radiochemistry, and safety as they relate to water and wastewater pollution control. Sufficient information is offered to allow the reader to inaugurate or reinforce programs of analytical QC that emphasize early recognition, prevention, and correction of factors leading to breakdowns in the validity of water and wastewater pollution control data.
In February 2011 the Wall Street Journal published an article about a disagreement among rating firms over the rating of a particular mortgage-backed security (MBS). The stated concern was that the MBS was not sufficiently diversified. An employee of Moody’s is quoted as saying: “Given this geographical concentration, there is ... idiosyncratic risk.” We contend that this is the wrong approach to securitization of mortgages that exhibit significant default risk. A basic result of portfolio theory is that investors can achieve diversification and elimination of idiosyncratic risk on their own by investing in a portfolio of securities. Our analysis in this paper goes further to argue that there may be a distinct disadvantage to diversification in mortgage backed securities, a “diversification discount”.
