2013-2014 Board Reveal

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Rainy Day Politics

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Latin American Countercyclical Fiscal Policy and the 2008 Financial Crisis

Matt Getz

The recent global financial crisis hit the developing world in September 2008. For Latin America, a region all too familiar with rapid downturns, this new global slump presented a serious threat to economic, political and social stability. Yet at the onset of the crisis, many observers were enthusiastic about the region’s outlook. Of particular interest was a newfound capacity for crisis-averting countercyclical policy. In the past, Latin America’s overdependence on foreign financing and fiscal profligacy meant that sudden stops would trigger severe contractions during downturns (Gavin & Perotti, 1997). But throughout the first decade of the 2000s, many Latin American countries moved toward exchange rate flexibility, inflation-targeting policies, stronger central banks, fiscal balances and decreased public debt (IDB, 2008; Fernández-Arias & Montiel, 2009). These macroeconomic reforms led observers to a common conclusion: Latin America now enjoyed newfound “space” for countercyclical policy.

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Tragedy of Cucumbers

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Sea Cucumber Overfishing in the Galapagos

Andrew Schein

Stanford University

This paper examines the efficiency implications of the Galápagos Islands’ participatory management style in regulating its stock of Isotichopus fuscus, a commercially and ecologically valuable species of sea cucumber. The paper first considers the I. fuscus fisheries today, about 20 years after fishermen began extracting sea cucumbers and examines whether fishermen may be extracting I. fuscus at a rate that is on the inefficient side of the basic catch/stock function. We then evaluate whether the participatory management model used in the Galápagos encourages good community commons governance. Lastly, we consider the practical feasibility of individual transferable quotas (ITQs) as a potential means to regulate sea cucumber extraction.

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Capital Markets Failure

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Financial Intermediation in China

Laura Fried

Brown University

Financial intermediation is an essential process for achieving healthy growth in any economy. The concept refers to the markets and institutions that pool capital from savers in search of return on assets and allocate it to viable business opportunities in search of financing. Financial intermediation in China is of particular interest because there is a huge pool of savings to invest, approximately $5 trillion. However, effectively pooling and allocating a society’s savings requires a robust and developed financial sector that can attract savings and evaluate investment opportunities to determine which should receive financing.

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