A New Framework For Analyzing And Managing Macrofinancial Risks Of An Economy


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Date: January 2008
Type: White Paper
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Overview: The high cost of international economic and financial crises highlights the need for a comprehensive framework to assess the robustness of national economic and financial systems. This paper published by President and Fellows of Harvard College proposes a new comprehensive approach to measure, analyze, and manage macroeconomic risk based on the theory and practice of modern Contingent Claims Analysis (CCA). It illustrate how to use the CCA approach to model and measure sectoral and national risk exposures, and analyze policies to offset their potentially harmful effects. This new framework provides economic balance sheets for inter-linked sectors and a risk accounting framework for an economy.

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