Kjell Hausken and Jonathan W. Welburn
The article develops a model to interpret the 2010–2018 financial crisis in Greece, Portugal, Ireland, Spain and Cyprus, and the loan programs from the IL (International Lender;…
Abstract
Purpose
The article develops a model to interpret the 2010–2018 financial crisis in Greece, Portugal, Ireland, Spain and Cyprus, and the loan programs from the IL (International Lender; i.e. the European Union, the European Commission, and the International Monetary Fund).
Design/methodology/approach
For each country, an isoelastic utility with constant relative risk aversion is assumed. For the IL a Cobb Douglas utility is assumed with consumption, the GDP (Gross Domestic Product) to debt ratio, and market stability as inputs, accounting for time discounting. This article applies two methods to assess the empirics. The first method considers the IL's strategy as a whole over the 2010–2018 period. The second method assumes that the IL maximizes its utility in one period to determine its optimal loan, accounting for the empirics in that period, and the debt in the previous period.
Findings
For the first method, when the output elasticity in the IL's Cobb Douglas utility is high favoring consumption, the IL prefers offering a higher loan than its actual loan. Otherwise the IL prefers to offer no loan. The output elasticity at which the IL prefers to offer a loan is lowest for Greece, second lowest for Cyprus, third lowest for Portugal, and highest for Ireland and Spain. A high loan to Greece over a larger range of the output elasticity for Greece's consumption is supported by Greece being prioritized through the loan program. For the second method, the IL prefers to offer no loan to Greece which is too burdened with debt. Thus, the first method seems preferable, considering the entire duration of the crisis holistically.
Originality/value
The article offers a novel perspective of how to assess debt crises, enabling the IL to weigh various factors such as consumption, GDP, loan offered, and each country's debt to credit markets.
Details
Keywords
Sonia Coman and Damon J. Phillips
We propose that the ambiguity of discourse around a category – rather than being problematic – improves the longevity of that category. This is especially true in the creative…
Abstract
We propose that the ambiguity of discourse around a category – rather than being problematic – improves the longevity of that category. This is especially true in the creative industries. Using methods and theories drawn from sociology and art history, we tested this thesis using swing as a case study. Based on three years of archival research we found 70 co-existing definitions of swing and 89 different uses of the term. These multiple meanings enabled various understandings to come in and out of focus over time, contributing to swing’s longevity. Our findings extend to other categories within the creative industries.