GROUP MEMBERSGROUP MEMBERS

Syed Ali Raza Naqvi (1232)Syed Ali Raza Naqvi (1232) M.Ibirahim (1194)M.Ibirahim (1194) Adnan Manzoor (1179)Adnan Manzoor (1179) Ali FarrukhAli Farrukh Umer NaseerUmer Naseer

Causes of recent Causes of recent international financial international financial

crisescrises The International Financial Crisis Started The International Financial Crisis Started

with Losses in the US Housing Marketwith Losses in the US Housing Market Root Cause #1 (Macro-Economic): Profligate Root Cause #1 (Macro-Economic): Profligate

Lending Led to LossesLending Led to Losses Without Smart Growth, World Financial Without Smart Growth, World Financial

Losses Would Have Been Far LessLosses Would Have Been Far Less Root Cause #2 (Micro-Economic): Excessive Root Cause #2 (Micro-Economic): Excessive

Land Use Regulation Exacerbated LossesLand Use Regulation Exacerbated Losses Toxic Mortgages are Concentrated Where Toxic Mortgages are Concentrated Where

there is Excessive Land Use Regulationthere is Excessive Land Use Regulation

A financial crisis is a situation when A financial crisis is a situation when money demand quickly rises relative to money demand quickly rises relative to money supply. Until a few decades ago, money supply. Until a few decades ago,

a financial crisis was equivalent to a a financial crisis was equivalent to a banking crisis. Today it may also take banking crisis. Today it may also take the form of a currency crisis. Many the form of a currency crisis. Many

economists have come up with theories economists have come up with theories on how a financial crisis develops and on how a financial crisis develops and how it could be prevented. There is, how it could be prevented. There is, however, no consensus and financial however, no consensus and financial

crises are still a regular phenomenon. A crises are still a regular phenomenon. A stock market crash is an example of a stock market crash is an example of a

financial crisis financial crisis

causes of international causes of international business crisesbusiness crises

The global financial crisis, brewing for a while, really The global financial crisis, brewing for a while, really started to show its effects in the middle of 2007 and started to show its effects in the middle of 2007 and into 2008. Around the world stock markets have into 2008. Around the world stock markets have fallen, large financial institutions have collapsed or fallen, large financial institutions have collapsed or been bought out, and governments in even the been bought out, and governments in even the wealthiest nations have had to come up with rescue wealthiest nations have had to come up with rescue packages to bail out their financial systems.packages to bail out their financial systems.

On the one hand many people are concerned that On the one hand many people are concerned that those responsible for the financial problems are the those responsible for the financial problems are the ones being bailed out, while on the other hand, a ones being bailed out, while on the other hand, a global financial meltdown will affect the livelihoods global financial meltdown will affect the livelihoods of almost everyone in an increasingly inter-of almost everyone in an increasingly inter-connected world. The problem could have been connected world. The problem could have been avoided, if ideologues supporting the current avoided, if ideologues supporting the current economics models weren’t so vocal, influential and economics models weren’t so vocal, influential and inconsiderate of others’ viewpoints and concerns.inconsiderate of others’ viewpoints and concerns.

causes of international causes of international business crisesbusiness crises

In the recent one hundred years, several financial In the recent one hundred years, several financial crises broke out. Some of them were serious and crises broke out. Some of them were serious and some of them were minor. However, all of them some of them were minor. However, all of them have giant impacts on every aspect of our life have giant impacts on every aspect of our life especially, social stability, living standard and especially, social stability, living standard and economy.economy.

The first financial crisis can trace back to 1929 in The first financial crisis can trace back to 1929 in American. It was the longest and worst one in the American. It was the longest and worst one in the capital society. This crisis leaded to the production capital society. This crisis leaded to the production decline greatly, which is unprecedented. The decline greatly, which is unprecedented. The actual volumes of the international trade fell down actual volumes of the international trade fell down at the first time in history. What's worse, this at the first time in history. What's worse, this financial disaster brought out giant losses. For financial disaster brought out giant losses. For many countries such as American, Germany and many countries such as American, Germany and England, their economic level fell back four years England, their economic level fell back four years or more than four years.or more than four years.

What is world bank doing What is world bank doing for international financial for international financial

crisecrise Though the most acute phase of the global financial crisis Though the most acute phase of the global financial crisis

has passed, recovery remains fragile and has passed, recovery remains fragile and uneven. Developing countries, in part due to sound policies uneven. Developing countries, in part due to sound policies in the run-up to the crisis, are expected to account for in the run-up to the crisis, are expected to account for almost one-half of global growth in the next few years. almost one-half of global growth in the next few years. Still, they face enormous challenges. Continuing high food Still, they face enormous challenges. Continuing high food prices are of particular concern, as is limited international prices are of particular concern, as is limited international financing. For developed countries, low growth and high financing. For developed countries, low growth and high unemployment persist.unemployment persist.

The poorest countries continue to need assistance to move The poorest countries continue to need assistance to move beyond the crisis. These countries can play a key role in beyond the crisis. These countries can play a key role in helping to boost demand to support global recovery, but helping to boost demand to support global recovery, but they will need access to financing for years to come.they will need access to financing for years to come.

Institutions recognized Institutions recognized with world bank with world bank

International Bank for Reconstruction and DInternational Bank for Reconstruction and Developmentevelopment

  International Development AssociationInternational Development Association   International Finance CorporationInternational Finance Corporation      Multilateral Investment Guarantee AgencyMultilateral Investment Guarantee Agency   Global Food Crisis Response ProgramGlobal Food Crisis Response Program

Business cyclesBusiness cycles

Periods during Periods during which a business, which a business, an industry or the an industry or the entire economy entire economy expands and expands and contracts.contracts.

The characteristics of The characteristics of economic cycles include: economic cycles include:

Fluctuations tend to Fluctuations tend to affect durable affect durable manufactured goods manufactured goods more than services.more than services.

Wholesale and Wholesale and industrial prices tend industrial prices tend to be affected more to be affected more than retail prices.than retail prices.

Short-term interest Short-term interest rates track and amplify rates track and amplify the cycles, moving in the cycles, moving in an exaggerated an exaggerated manner along with the manner along with the economy.economy.

Business Cycle FactsBusiness Cycle Facts

What is a business cycle?What is a business cycle? We present an organized discussion We present an organized discussion

about facts that characterize business about facts that characterize business cycles in the U.S.cycles in the U.S.

The description of The description of regular co-movements regular co-movements

constitutes what we call constitutes what we call business cycle facts..business cycle facts..

Characterizing Co-Characterizing Co-movementsmovements

Business cycle facts are best described Business cycle facts are best described by characterizing co-movements,by characterizing co-movements,

Coincident, leading and lagging variablesCoincident, leading and lagging variables Procyclical, countercyclical, acyclical Procyclical, countercyclical, acyclical

variablesvariables The amplitude of fluctuations is also useful The amplitude of fluctuations is also useful

in characterizing business cycle factsin characterizing business cycle facts

Where Do We Go from Where Do We Go from Here?Here?

Business cycle facts suggest Business cycle facts suggest regularities that we hope to explain regularities that we hope to explain with theory.with theory.