nep-isf New Economics Papers
on Islamic Finance
Issue of 2021‒12‒20
six papers chosen by

  1. Ups and Downs in Finance, Ups without Downs in Inequality By Olivier Godechot; Nils Neumann; Paula Apascaritei; István Boza; Martin Hällsten; Lasse Henriksen; Are Hermansen; Feng Hou; Jiwook Jung; Eunmi Melzer; Halil Mun; Matthew Sabanci; Max Soener; Naomi Kodama; Alena Křížková; Zoltán Lippényi; Elvira Marta; Silvia Melzer; Eunmi Mun; Halil Sabanci; Matthew Soener; Max Thaning
  2. CBDC as Imperfect Substitute for Bank Deposits: A Macroeconomic Perspective By Philippe Bacchetta; Elena Perazzi
  3. Effect of Fiscal and Monetary Policies on Economic Activities in South Africa: The Role of Policy Uncertainty By Aye, Goodness
  4. The impact of U.S. employer-sponsored insurance in the 20th century By Vegard M. Nygaard; Gajendran Raveendranathan
  6. Revisiting the Stabilization Role of Public Banks: Public Debt Matters By H. Elif Ture

  1. By: Olivier Godechot (Sciences Po - Sciences Po); Nils Neumann (Sciences Po - Sciences Po); Paula Apascaritei; István Boza; Martin Hällsten; Lasse Henriksen; Are Hermansen; Feng Hou; Jiwook Jung; Eunmi Melzer; Halil Mun; Matthew Sabanci; Max Soener; Naomi Kodama; Alena Křížková; Zoltán Lippényi; Elvira Marta; Silvia Melzer; Eunmi Mun; Halil Sabanci; Matthew Soener; Max Thaning
    Date: 2021–12–01
  2. By: Philippe Bacchetta (University of Lausanne; Centre for Economic Policy Research (CEPR); Swiss Finance Institute); Elena Perazzi (Ecole Polytechnique Fédérale de Lausanne)
    Abstract: The impact of Central Bank Digital Currency (CBDC) is analyzed in a small open economy model with monopolistic competition in banking and where CBDC is an imperfect substitute with bank deposits. The design of CBDC is characterized by its interest rate, its substitutability with bank deposits, and its relative liquidity. We examine how interest-bearing CBDC would affect the banking sector, public finance, GDP and welfare. Welfare may improve through three channels: seigniorage; a lower opportunity cost of money; and a redistribution away from bank owners. In our numerical analysis we find a maximum welfare improvement of 60 bps in consumption terms.
    Date: 2021–12
  3. By: Aye, Goodness
    Keywords: Agricultural Finance, Agricultural and Food Policy
    Date: 2021–08
  4. By: Vegard M. Nygaard; Gajendran Raveendranathan
    Abstract: The introduction of employer-sponsored insurance (ESI) in the 1940s led to the largest decline in the uninsurance rate in U.S. history. To study the fiscal and welfare implications of this insurance expansion, we endogenize the selection of workers into jobs with and without ESI in a general equilibrium life-cycle model where consumers face idiosyncratic health shocks. Our model rationalizes non-targeted empirical patterns related to ESI coverage between 1940 and 2010 and in recent cross-sectional data. ESI leads to moderate welfare gains in the short run (0.5 percent of lifetime consumption for the average consumer) but zero gains or even moderate losses in the long run. The reason is that the health insurance benefit provided by ESI dominates in the short run but the tax increase required to offset ESI tax exemptions dominates in the long run. We substantiate these welfare estimates by showing that our model rationalizes both the level and rise in total ESI tax exemptions. Finally, we show that tax-financed universal health insurance — considered among policymakers in the 1930s — would have led to significantly higher welfare gains.
    Keywords: employer-sponsored insurance; general equilibrium life-cycle; heterogeneous agents; universal health-care insurance; welfare.
    JEL: E24 H51 I13 J33
    Date: 2021–12
    Abstract: The day after Tuesday, February 18, 2020, enthusiasm was observed following the publication by the Ministry of Finance of a cash flow plan (PTR) for the 2020 fiscal year, with a level of expected revenue lower than that set in the Finance Law of the same year. There was confusion in the comments of the population between the state budget (finance law of the year) and the public sector treasury plan. The purpose of this article was to shed light on the difference in nature between the state budget and the treasury plan as well as the reason for its revision. The article established that, the State budget is a planning instrument which is annual or multi-year and fixed in time, on the other hand the cash flow plan is an instrument, a tool of management and piloting of the execution. of the State Budget with regard to fluctuations in the economic situation and the constraints found in the field. It is an instrument that can be adjusted according to the economic development involved. Its development is based on the need for the Government to have a better tool for steering budget execution. Its revision is therefore a result of the changing nature of the parameters used in the preparation of the state budget.
    Keywords: Cash flow plan, state budget, finance law
    JEL: E62 E64
    Date: 2020–02–21
  6. By: H. Elif Ture
    Abstract: This paper revisits the stabilization role of public banks and analyzes whether weak public finances may hinder this role. During the global financial crisis (GFC), public banks were widely used to counter the private credit crunch and prop up the economy. Using cross-country bank-level data for 125 advanced and developing economies for 1999–2018, the paper finds public bank lending to be less procyclical than private bank lending on average, particularly during busts. A key result, however, is that in developing economies with high public debt levels, public bank lending has been more procyclical, particularly outside of the GFC period. This finding suggests high public debt can limit the stabilization role of public banks during domestic busts, likely reflecting higher financing costs public banks face and lower subsidies they receive in economies with tighter budget constraints.
    Keywords: Public banks;countercyclical lending;economic stabilization;high public debt;WP;public bank;bank lending;development bank;bank borrowing costs;doom loop
    Date: 2021–01–15

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