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Previous research on the relationships between macroeconomic conditions and health status reveal improvements in physical health during economic downturns. However, few studies have examined whether mental health status improves or declines during tough economic times. This paper estimates the effect of a key macroeconomic indicator, the state-level unemployment rate, on health-related quality of life. Analyzing recent data from Waves 1 and 2 of the NESARC and controlling for individual heterogeneity with fixed-effects models, our study suggests that health-related quality of life, both physical and mental, worsens with increases in the unemployment rate. Although the effect sizes are relatively small in magnitude for both outcomes, the impact is more pronounced for mental health. These results raise questions about the unexpected findings reported in earlier studies of a health-improving effect of economic downturns and suggest that the current worldwide economic recession may have some serious hidden costs.

This paper explores the macroeconomic implications of financing for retirement in advanced economies. It offers an additional theoretical explanation of the possible long-term drivers of the 2007-2009 financial crisis. It develops a simple integrated macro-financial model of monetary production, and suggests that the increasingly systemically important retirement institutions present incentives not aligned with the macroeconomic needs of financing for retirement. It thus identifies demographic change and retirement finance as one of the underlying causes of build-up of intrinsic fragility in the financial sector.

The ongoing financial crisis has raised concerns in many circles about a potential future wave of sovereign defaults spreading among developing countries and, therefore, the need for additional rounds of debt relief in poor indebted countries. This paper addresses this issue for a group of 31 International Development Association (IDA)-only African countries, which are in a fragile debt situation. Using the most recent debt sustainability analyses (DSAs) undertaken for these countries by the World Bank and the IMF, this paper studies the potential adverse effect of the ongoing financial crisis on the countries' debt burden indicators, as a function of the depth and length of the crisis. The latter is measured by the fall and the duration of such fall in exports revenues, and by the terms at which each country can obtain financing to muddle through the crisis period. The analysis underscores the importance of concessional financing for these countries, especially if the crisis proves to be a protracted one. This, because the likelihood of countries being able to muddle through the crisis without defaulting on their external debt decreases with the hardening of the financial conditions faced by them--alternatively, the size of the downsizing in domestic (fiscal) expenditures needed to ensure the service of their foreign debts increases with the tightening of financial conditions.

The global economic crisis has caused economic collapse in many countries. Indonesia is obviously affected by this crisis, its export growth declined significantly. Nevertheless, the impact of the crisis on the Indonesian economy is relatively limited compared to other countries in the region, including Singapore, Malaysia, and Thailand. This situation leads into a question of why the impact of the global crisis on the Indonesian economy is relatively limited so far. Is it because of the structure of Indonesia's trade or the effectiveness of Indonesia's fiscal policy and monetary response? This paper argues that there are at least two reasons why Indonesia's performance was relatively good. Firstly, it was due to the appropriate policy responses both from Bank Indonesia and the Indonesian government. Secondly, Indonesia's relatively small export share to GDP saved the country from the global financial crisis. This was more a case of good luck than deliberately planned economic policy strategy. Nevertheless, this paper indicates that exports are a source of Indonesia's economic growth. Exports have a large effect in supporting economic growth, albeit less stable compared to domestic demand. Because of this, a strategy safeguarding a balance between domestic economy and global orientation, such as becoming a part of a production network and promoting export-oriented growth, must be a part of the development strategy of the national economy.