Chapter 5Symptoms

There can be symptoms in the aftermath of a financial or sovereign crisis. Some of these are abstract concepts that might have been topics of discussion in academic research that never saw the light of day in financial markets and with policy makers. However, a crisis may change this position materially because the concepts could provide a comprehensive solution or a viable, creative alternative for policy setting. At present, the abstract symptoms that are receiving attention by markets are, for example, financial repression, multiple equilibria, and liquidity traps. The academic debate attempted to quantify their potential effect in a model environment, but now they are becoming reality. Repression, multiple equilibria, and ...

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