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on Regulation |
| By: | Thorsten Koeppl; Cyril Monnet; Erwan Quintin |
| Abstract: | Are efficiency considerations important for understanding differences in the development of institutions? The authors model institutional quality as the degree to which obligations associated with exchanging capital can be enforced. Establishing a positive level of enforcement requires an aggregate investment of capital that is no longer available for production. When capital endowments are more unequally distributed, the bigger dispersion in marginal products makes it optimal to invest more resources in enforcement. The optimal allocation of the institutional cost across agents is not monotonic and entails a redistribution of endowments before production begins. Investing in enforcement benefits primarily agents at the bottom of the endowment distribution and leads to a reduction in consumption and income inequality. Efficiency, redistribution and the quality of institutions are thus intricately linked and should be studied jointly. |
| Date: | 2008 |
| URL: | http://d.repec.org/n?u=RePEc:fip:fedpwp:08-33&r=reg |
| By: | Fumiko Hayashi |
| Abstract: | This paper considers possible public policies that could improve efficiency and welfare distribution in the U.S. retail payments industry. Mainly, four options, i) encouraging competition; ii) allowing merchants to surcharge; iii) regulating merchant fees; and iv) regulating payment card rewards, are discussed, but each option has advantages and disadvantages. Any single option may not achieve the policymakers' objective; rather, combining several policy options may be required. |
| Date: | 2008 |
| URL: | http://d.repec.org/n?u=RePEc:fip:fedkrw:rwp08-08&r=reg |
| By: | Tatom, John |
| Abstract: | The Federal Reserve (Fed) and the U.S. Treasury have taken unprecedented steps to stem the financial crisis that began in August 2007 as part of the extended foreclosure crisis. In the most recent episode in September 2008, seven financial institutions either failed or were merged with stronger firms, sparking public concerns for their assets and for their own financial institutions. This has led to several new institutional arrangements of questionable value, foremost among them, the Bush Administration’s $700 billion bailout fund for illiquid mortgage-related assets on the books of financial institutions. All of these events had been anticipated for months, but the surprise was the bunching of these failures over such a short interval. The other noteworthy feature of these developments is the speed and completeness with which the private sector moved in to acquire the assets and operations of these companies with little or no regulatory or taxpayer cost. There are exceptions, but even in those cases, the costs were minimized and the firms involved hardly missed a beat, except for their new owners. This paper reviews arguments that the failure of Lehman precipitated recent developments and also whether financial deregulation was responsible. A Lehman-related development was the run on money market mutual funds and policy responses to it by both the Fed and Treasury. These are critically reviewed here as well. Finally, it reviews how rapidly and effectively the Fed responded to the September issues, something that Treasury bailouts cannot do, and that represents a major turning point in the Fed response to the foreclosure/financial crisis. |
| Keywords: | central banking policy; credit approach to monetary policy; sterilization; systemic risk |
| JEL: | E58 E52 E44 |
| Date: | 2008–09–30 |
| URL: | http://d.repec.org/n?u=RePEc:pra:mprapa:12502&r=reg |
| By: | Chen, Yan |
| Abstract: | The purpose of this paper is to investigate the relationship between investor protection and corporate valuation. “Tunneling effects” which means that the controlling shareholders enrich themselves by expropriating the rights and interests of minor shareholders are usually referred in recent literatures of corporate finance. In this paper, we build a simple model which combines the firm’s inside ownership structure with outside law and regulation surrounding in order to inhibit “Tunneling effects”, and then we analyze their effects on corporate valuation. Finally, we test the hypothesis obtained from the model using a sample of 110 firms listed in Chinese stock market. The empirical results show that better protection of minority shareholders and appropriate ownership structures can help to elevate the valuation of firms. |
| Keywords: | Investor protection; Law and regulation; Ownership structure; Corporate valuation; Panel data estimate |
| JEL: | K22 G32 |
| Date: | 2007–11 |
| URL: | http://d.repec.org/n?u=RePEc:pra:mprapa:12427&r=reg |
| By: | Eric Langlais |
| Abstract: | The purpose of this note is to investigate the optimal enforcement of the penal code when criminals invest in a specific class of avoidance activities termed dissembling activities (i.e. self-protection efforts undertaken by criminals to hedge their illegal gains in case of detection and arrestation). We show that the penal law may have two different screening effects: it may separate the population of potential criminals between those who commit the crime and those who do not, and in the former group, between those who undertake dissembling efforts and those who do not. Then, we show that it is never optimal to use less than the maximal fine in contrast to what may occur with avoidance detection (i.e. efforts undertaken in order to reduce the probability of arrestation: MALIK [1990]); and furthermore, that the optimal penal code may imply overdeterrence. Finally, we show that any reform of the penal code has ambiguous effects when criminals undertake dissembling activities which are a by-product of illegal activities, since increasing the maximum possible fine may increase or decrease the number of crimes committed and may increase or decrease the proportion of illegal gains hedged by criminals. |
| Keywords: | deterrence, dissembling activities, optimal enforcement of law |
| JEL: | D81 K42 |
| Date: | 2008 |
| URL: | http://d.repec.org/n?u=RePEc:drm:wpaper:2008-40&r=reg |
| By: | Cororaton, Caesar B. |
| Abstract: | "The objective of this paper is to review the agricultural trade and domestic policies of the Philippines and to provide an assessment of the types and levels of domestic support relative to the rules of the World Trade Organization (WTO). Changes in trade protection and support in the Philippines, including tariff structure, quantitative restrictions, and domestic support, are discussed and analyzed. The paper also discusses the pattern of public expenditure on agriculture in the Philippines, including major agricultural productivity-enhancing programs. The present structure of protection and support favors the agricultural sector. Trade protection is higher in agriculture relative to manufacturing. There is a quantitative restriction on rice imports and a tariff rate quota in several agricultural commodities. The green box payments and the special and differential treatment constitute the major domestic support for agriculture. These support payments are relatively substantial and will continue to be sizable in the future to support the government's food sufficiency policy. However, the trade-distorting market price support for rice and corn is significantly below the de minimis limit that applies to the Philippines under the WTO Uruguay Round Agreement on Agriculture." from author's abstract |
| Keywords: | Philippine agriculture, Agricultural support, WTO support, WTO compliance, Notification of domestic support, trade, |
| Date: | 2008 |
| URL: | http://d.repec.org/n?u=RePEc:fpr:ifprid:827&r=reg |
| By: | Bouet, Antoine; Laborde, David |
| Abstract: | "In times of economic turmoil, countries might decide to increase current tariff rates to protect domestic industries or raise revenues in order to finance domestic programs. Using the highest applied or bound rate imposed by countries from 1995 to 2008 as an indicator, this study presents several scenarios regarding the economic costs of a failed Doha Round and a subsequent rush into protectionism. For example, in a scenario where the applied tariffs of major economies would go all the way up to currently bound tariff rates, world trade would decrease by 7.7 percent. In a more modest scenario where countries would raise tariffs to maximum rates applied during the past 13 years, world trade would decrease by 3.2 percent. These increases in duties would reduce world welfare by US$353 billion under the first scenario, and by US$134 billion under the more modest scenario. While such an increase in duties would particularly impact agricultural exports (–6.9 percent), especially in developing countries (–11.5 percent), exports of industrial goods could also face a substantial reduction: 2 percent in developed countries and 4.8 percent in developing countries. This study concludes there would be a potential loss of US$1,064 billion in world trade if world leaders were to fail to conclude the Doha Development Round of trade negotiations in the next few weeks and if countries were to implement subsequently protectionist policies, as occurred after the end of the Uruguay Round. The failure of the negotiations would prevent a US$336 billion increase in world trade that would have come from a reduction in tariffs and domestic support, while a worldwide resort to protectionism would contract world trade by US$728 billion." from text |
| Keywords: | Agricultural policies, WTO Doha round, International trade, exports, tariffs, Protectionism, |
| Date: | 2008 |
| URL: | http://d.repec.org/n?u=RePEc:fpr:issbrf:56&r=reg |