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on Regulation |
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Issue of 2005‒06‒05
fifteen papers chosen by Christian Calmes Université du Québec en Outaouais, Canada |
| By: | Pasquale Commendatore (Università di Napoli 'Federico II'); Ingrid Kubin (Vienna University of Economics & B.A.) |
| Abstract: | Modern macroeconomic models with a Keynesian flavour usually involve nominal rigidities in wages and goods prices. A typical model is static and combines wage bargaining in the labour markets and monopolistic competition in the goods markets. As central policy implication it follows that deregulating labour and/or goods markets increases equilibrium employment. We reassess the consequences of deregulation in a dynamic model. It still increases employment at the fixed point, which corresponds to the static equilibrium solution. However, deregulation may also lead to stability loss and endogenous fluctuations. |
| Keywords: | Labour and goods markets deregulation, monopolistic competition, business cycles |
| JEL: | E1 |
| Date: | 2005–05 |
| URL: | http://d.repec.org/n?u=RePEc:wiw:wiwgee:geewp49&r=reg |
| By: | Carolyn Currie (School of Finance and Economics, University of Technology, Sydney) |
| Abstract: | Regulatory failure causing financial crises has occurred with great frequency in the last ten years in both advanced and emerging nations. Theories of regulation have failed to define and describe the meanings of deregulation, the range of regulatory models and their goals, the significance of regulatory failure, how to measure it and how to prevent it. This paper is motivated by the perception that incorrect design and failure to conduct ongoing performance monitoring of regulatory models in emerging economies as well as in some advanced industrial states is precipitating financial crises. Deregulation is redefined in a framework that recognises the diversity between financial systems that exists due to differences in regulatory models, in the ability to comply with best international structure, in the ownership of the means of production and in the calibre of human and social capital, within the framework of the limiting features of government goals and economic resources and infrastructure. Case studies of regulatory failure in an advanced and an emerging nation illustrate the necessity for a staged approach to liberalisation of a financial system, which takes account of the capacity of the underlying economy and society to conduct effective prudential supervision before attempts are made to remove protective measures. The comparison of fin de millennium solutions in advanced nations of integrated supervisors also illustrates the correct embodiment of government goals in regulatory models and the importance of feedback mechanisms such as the establishment of early warning systems. |
| Keywords: | regulatory failure; regulatory models, deregulation |
| JEL: | K2 N20 N40 P00 |
| Date: | 2005–05–01 |
| URL: | http://d.repec.org/n?u=RePEc:uts:wpaper:142&r=reg |
| By: | Troy Quast (University of Florida) |
| Abstract: | This paper examines the rates set by state public utility commissions (PUCs) that competitors must pay to access the local loop of the largest incumbent U.S. telecommunications suppliers (RBOCs). Employing a unique data set and dynamic panel data regressions, the results indicate that the rates are influenced by factors beyond local costs. Specifically, rates in the smaller states in each RBOC region are strongly influenced by the largest state in the region. Rates are lower in the period immediately before the RBOC applied for Section 271 approval in the state and where the level of competitive entry is lower, while they are higher in states where the governor is a Republican. The analysis suggests that this cornerstone of the Telecommunications Act of 1996 may been applied inconsistently across states and information spillovers should be considered when state agencies are charged with implementing federal policy. |
| Keywords: | telecommunications, regulation, federal government, state government |
| JEL: | H70 L50 L96 |
| Date: | 2005–05–29 |
| URL: | http://d.repec.org/n?u=RePEc:wpa:wuwpio:0505013&r=reg |
| By: | Hong-Bum Kim (Gyeongsang National University, Seoul, Korea); Chung Lee (Department of Economics, University of Hawaii at Manoa) |
| Abstract: | In the wake of the economic crisis of 1997-98 South Korea undertook a number of reforms in financial supervision. In spite of these reforms doubts have been raised as to whether Korea has in fact succeeded in creating a system of financial supervision capable of dealing with certain risks and responding to new challenges appropriately. This paper argues that because of institutional interdependency a successful institutional reform requires changing not only the particular institution at issue but also other inter-related institutions; that Korea’s post-crisis reform in financial supervision was limited to changing formal institutions for financial supervision; and that further reforms are needed in other institutions—formal as well as informal—if Korea is to further improve financial supervision. |
| Keywords: | financial reform, institutional interdependency, Korea’s post-crisis reform in financial supervision |
| JEL: | G20 N20 O17 |
| Date: | 2005 |
| URL: | http://d.repec.org/n?u=RePEc:hai:wpaper:200510&r=reg |
| By: | Juan Antonio Lacomba (Department of Economic Theory and Economic History, University of Granada); Francisco Miguel Lagos (Department of Economic Theory and Economic History, University of Granada) |
| Abstract: | This paper analyzes the reform of the pensionable age as an answer to the future financing problems of public pension systems. We use a two-staged model where, firstly, the government decides the redistribution level of the pension system, and, secondly, individuals face a voting process on the legal retirement age. Our results suggest that an increase in the re-distributive character of the system could lead to a larger social consensus to postpone the legal retirement age. Surprisingly, it could be the case that the richest people would support more redistribution if that implies to postpone the pensionable age. |
| Keywords: | Legal retirement age, pension benefits, redistribution level |
| JEL: | D72 D91 H55 |
| Date: | 2005–06–01 |
| URL: | http://d.repec.org/n?u=RePEc:gra:wpaper:05/13&r=reg |
| By: | Carolyn Currie (School of Finance and Economics, University of Technology, Sydney) |
| Abstract: | Most problematic of the Basel II capital adequacy requirements is the subset of Pillar I, requiring provision for operational risk (OR) as distinct from credit and market risk. Previous tests of the strategic effect of this new regulation from three prior Quality Impact Studies (QIS) conducted in G10 countries under the guidance of the Bank for International Settlements, have concluded that OR requirements poses difficulties of definition, implementation, and strategic planning. Anticipated strategic effects include dramatic changes to product development, investment and asset mix, as well as the necessity to rapidly develop new risk rating models and techniques, together with vastly expanded internal and external audit compliance routines. Unlike QIS1, 2 and 3, QIS4 focuses on operational risk, but still has drawbacks. This paper discusses its approach, in view of the ongoing difficulties that banks are experiencing with operational risk, particularly in the construction of a database. It concludes by listing the unanswered questions that have not even been addressed in four studies of the strategic impact of Basel II?s OR requirements. It also suggests that many smaller banks and emerging nations may not be able to use the sophisticated approaches and hence will suffer a competitive disadvantage. Hence in view of drawbacks in the simpler approaches such as lack of correlation of operational risk and revenue, other indicators such as the standard deviation of efficiency measures are suggested. |
| Keywords: | operational risk; Basel II |
| JEL: | E42 E44 E58 |
| Date: | 2005–05–01 |
| URL: | http://d.repec.org/n?u=RePEc:uts:wpaper:141&r=reg |
| By: | Alessandra Casella; Andrew Gelman |
| Abstract: | This paper proposes a simple scheme designed to elicit and reward intensity of preferences in referenda: voters faced with a number of binary proposals are given one regular vote for each proposal plus an additional number of bonus votes to cast as desired. Decisions are taken according to the majority of votes cast. In our base case, where there is no systematic difference between proposals' supporters and opponents, there is always a positive number of bonus votes such that ex ante utility is increased by the scheme, relative to simple majority voting. When the distributions of valuations of supporters and opponents differ, the improvement in efficiency is guaranteed only if the distributions can be ranked according to first order stochastic dominance. If they are, however, the existence of welfare gains is independent of the exact number of bonus votes. |
| Date: | 2005–05 |
| URL: | http://d.repec.org/n?u=RePEc:nbr:nberwo:11375&r=reg |
| By: | Sadakazu Osaki (Nomura Institute of Capital Market Research) |
| Abstract: | The Japanese version of the Big Bang announced in November 1996 was a major plan to drastically reform the financial and capital markets in Japan through significant revisions to laws such as the Securities and Exchange Law. The Japanese Big Bang was planned because of mounting worries about the lowering of the international status of Japanese markets and deadlock of the existing financial structure which depended excessively on indirect financing, mainly of bank loans. The Japanese Big Bang was supposed to have been completed by the end of March, 2001, but in reality system reforms for financial and capital markets are still continuing including revisions of the Securities and Exchange Law and of the taxation system of securities. Reform of the financial structure -- the goal of Big Bang -- has not made notable progress, an example being that most privately held financial assets are still in the form of deposits, because of the following reasons. The first reason is that participation of individual investors in the security market has not significantly increased. This is due to lack of familiarity with security companies that broker investments in securities and lack of knowledge of the market and investments. The second reason is that the use of financial and capital markets to procure funds is being hindered by the irrational behavior of banks, an example of which is the placement of loans at interest rates which are not commensurate with the risks involved. This is particularly problematic. It is necessary to reveal the values of securities in the trading market to the maximum extent and to promote conversion of bank credit into securities in order to normalize the behavior of banks. To bring this about it is necessary to strengthen supervision to prevent unjust behavior in the market in order to raise investor confidence in the market. As a consequence of the Japanese Big Bang and subsequent reforms, the financial and capital market systems of Japan now bear comparison with those in the UK and the US, at least procedurally. However, the system reforms implemented in Japan may just become a state of tilling the ground and failing to sow if there is no change in the attitude of control that experts (including the managing authorities who design the systems) persist in maintaining and no change in the way of thinking of companies that regard procurement of funds in the market as merely being the means to make adjustments for bank borrowing. |
| Keywords: | financial reform, capital market, Japan, Security law, Exchange law, Big bang, bank borrowing |
| JEL: | P41 P11 K39 F31 |
| Date: | 2005–01 |
| URL: | http://d.repec.org/n?u=RePEc:eab:macroe:479&r=reg |
| By: | Graziella Bertocchi (Università di Modena e Reggio Emilia); Chiara Strozzi (Università di Modena e Reggio Emilia) |
| Abstract: | We investigate the origin, impact and evolution of citizenship laws. Citizenship laws originate from the common and civil law traditions, which apply jus soli and jus sanguinis, respectively. We compile a data set across countries of the world starting from the 19th century. The impact of the original, exogenously-given laws on international migration proves insignificant for the early, mass migration waves, which confirm to be driven primarily by economic incentives. Postwar convergence of citizenship laws is determined by legal tradition and international migration, but also by border stability, the establishment of democracy, the welfare burden, cultural factors and colonial history. |
| Keywords: | Citizenship laws, International migration, Legal origins, Democracy, Borders |
| JEL: | F22 K40 N30 O15 |
| Date: | 2005–05 |
| URL: | http://d.repec.org/n?u=RePEc:fem:femwpa:2005.71&r=reg |
| By: | Philip J. Cook; Jens Ludwig |
| Abstract: | A common practice in the fields of education, mental health, and juvenile justice is to segregate problem youths in groups with deviant peers. Assignments of this sort, which concentrate deviant youths, may facilitate deviant peer influence and lead to perverse outcomes. This possibility adds to the list of arguments in support of "mainstreaming" whenever possible. But there are other concerns that help justify segregated-group assignments, including efficiency of service delivery and protection of the public. Our analysis organizes the discussion about the relevant tradeoffs. First, the number of deviant youths (relative to the size of the relevant population, or to the number of assignment locations) affects whether the harm-minimizing assignment calls for diffusion or segregation. Second, the nature of the problematic behavior is relevant; behavior which has a direct, detrimental effect on others who share the assignment makes a stronger case for segregation. Third, the capacity for behavior control matters, and may make the difference in a choice between segregation and integration. We briefly discuss the empirical literature, which with some exceptions is inadequate to the task of providing clear guidance about harm-minimizing assignment strategies. Finally, we reflect briefly on the medical-practice principle "first do no harm," and contrast it with the claims of potential victims of deviants. |
| JEL: | I18 I2 K42 |
| Date: | 2005–06 |
| URL: | http://d.repec.org/n?u=RePEc:nbr:nberwo:11390&r=reg |
| By: | Anil Markandya (The World Bank); Alberto Longo (University of Bath) |
| Abstract: | In the present paper, after reviewing the results of the ExternE project and its follow-up stages in the estimation of the external costs of electricity production, we look at the policy instruments for the internalisation of such costs. Emphasis is given to subsidies, such as feed-in tariffs, competitive bidding processes and tradable green certificates to stimulate the use of renewables in the production of electricity. When policy-makers are asked to choose the instrument(s) to internalise the externalities in the electricity production, they have to find a solution that gives the best outcome in terms of efficiency, cost minimisation, impact on the job market, security of energy supply, equity of the instrument, technological innovation, certainty of the level of the internalisation, and feasibility. The choice of the instrument will require some trade-offs among these criteria. Conjoint choice analysis can help in investigating how stakeholders and policy makers trade off the criteria when choosing a policy for the internalisation of the externalities. In this paper we present the first results of a questionnaire that employs conjoint choice questions to find out how policy makers and stakeholders of the electricity market trade off some socio-economic aspects in the selection of the policy instruments for the internalisation of the externalities. The results of this first set of interviews will be useful for further research. |
| Keywords: | Policy instruments, ExternE, External costs, Electricity, Conjoint choice analysis |
| JEL: | Q42 Q48 Q51 |
| Date: | 2005–05 |
| URL: | http://d.repec.org/n?u=RePEc:fem:femwpa:2005.74&r=reg |
| By: | Julio Peña Torres (ILADES-Georgetown University, Universidad Alberto Hurtado); R. Javier Bustos S. (Master Student, ILADES-Georgetown University, Universidad Alberto Hurtado, Chile); Claudio Pérez B. (Sociology Department, Universidad Alberto Hurtado, Chile.) |
| Abstract: | This paper offers an in-depth case study analysis about institutional changes occurring since the late 1990s at the Chilean Austral Hake artisanal fishery. This high-value exporting fishery, specialized on selling fresh-chilled products, represents a pioneering example of self-government developments within artisanal fishermen's communities exploiting mobile marine resources in Chile. Despite entry restrictions and global catch quotas, this fishery faced a productivity crisis from the late 1980s up to the second half of the 1990s. As a response to this, fishermen initiated talks with the Government in order to introduce new management rules. After gradual evolution, today there prevails a well-developed system of de facto individual non-transferable quotas subject to a high degree of self-management by fishermen organizations. We discuss industrial organization issues which condition the exchange solutions found at this fishery. In particular, we discuss incentives derived from industrial concentration and buyer power, vertical integration and other strategies of vertical control between transacting parties at this industry; namely, between wholesale marketing brokers, exporters, processors, direct buyers of the catch and fishermen. Contractual issues of relevancy are: the use of informal markets; multi-dimensional contracting; temporal specificity due to product perishability; the use of different instruments for vertical control; and the influence of increasing degrees of industrial concentration as we advance through the wholesale commercialization channel, moving closer to the retailing stages at final export markets. |
| Keywords: | Producción y comercialización de Alimentos; Cadenas de producción; Control y Coordinación Vertical; Pesca Artesanal en Chile; Merluza Austral. |
| Date: | 2005–04 |
| URL: | http://d.repec.org/n?u=RePEc:ila:ilades:inv161&r=reg |
| By: | Egels, Niklas (Gothenburg Research Institute) |
| Abstract: | Hundreds of concepts have been proposed for describing how ethical issues in business should be defined. In this paper, I review how the six most commonly used concepts have been defined. This is a contribution to the international business ethics research, since hardly any academic work has reviewed more than one or two concepts simultaneously. The results from the review show that differences as well as similarities exist between the concepts in terms of context, content and perspectives. In terms of context, I find that the empirical version of Corporate Social Performance (CSP) is the only concept consistently used in a certain context. In terms of perspective, a normative perspective is present in all six concepts and a shareholder perspective in four of the six concepts. I also find that an overwhelming majority of the conducted research is based on a normative perspective. In terms of content, the review shows that it is becoming increasingly difficult to separate Sustainable Development (SD), Corporate Social Responsibility (CSR), Corporate Citizenship (CC) and Corporate Social Perfromance (CSP) from each other and that four of the six concepts have been vaguely defined and that all concepts have been inconsistently defined. Based on this, I conclude that the choice of perspective is more important than the choice of concept when defining ethical issues. I also conclude that lack of a consistent and coherent core definition in existing research makes it difficult to utilize the reviewed research for defining ethical issues in business, since it seems difficult to find a rationale for choosing between the different proposed definitions. |
| Keywords: | CSR; sustainability; corporate citizenship; corporate social performance; business ethics; stakeholder theory |
| Date: | 2005–05–27 |
| URL: | http://d.repec.org/n?u=RePEc:hhb:gungri:2005_004&r=reg |
| By: | Benno Torgler; Neven T. Valev |
| Abstract: | In recent years the topic of corruption has attracted a great deal of attention. However, there is still a lack of substantial empirical evidence about the determinants of corruption. This empirical study analyses a cross-section of individuals using the World Values Survey wave III (1995-1997), investigating the justifiability of corruption. The major aim in the paper is to investigate whether we observe differences between age groups. Despite an increasing interest of economists in the determinants of corruption, the factor age has been widely neglected in the literature. The results suggest that there is a strong age effect, controlling in a multivariate analysis for additional factors. |
| Keywords: | Corruption; Age; Bribe; Social Norms |
| JEL: | H10 J16 K42 |
| Date: | 2004–10 |
| URL: | http://d.repec.org/n?u=RePEc:cra:wpaper:2004-24&r=reg |
| By: | Sara Markowitz; Robert Kaestner; Michael Grossman |
| Abstract: | The problems of teen pregnancy, HIV/AIDS and the high rates of other sexually transmitted diseases among youth have lead to widespread concern with the sexual behaviors of teenagers. Alcohol use is one of the most commonly cited correlates of risky sexual behavior. The purpose of this research is to investigate the causal role of alcohol in determining sexual activity and risky sexual behavior among teenagers and young adults. This research also addresses the question of whether there are public policies that can reduce the risky sexual behavior that results in harmful consequences. Individual and aggregate level data are used to investigate these questions. Results show that alcohol use appears to have no causal influence in determining whether or not a teenage has sex. However, alcohol use may lower contraception use among sexually active teens. |
| JEL: | I0 |
| Date: | 2005–05 |
| URL: | http://d.repec.org/n?u=RePEc:nbr:nberwo:11378&r=reg |