nep-reg New Economics Papers
on Regulation
Issue of 2006‒07‒02
eight papers chosen by
Christian Calmes
Universite du Quebec en Outaouais, Canada

  1. The economics of IPR protection policies By Gil, Ricard
  2. Deterring Abuse of the Financial System: Elements of an Emerging International Integrity Standard By John M Abbott; R. B. Johnston
  3. Financial System Standards and Financial Stability: The Case of Basel Core Principles By David Marston
  4. Domestic Bank Regulation and Financial Crises: Theory and Empirical Evidence from East Asia By Robert Dekle; Kenneth Kletzer
  5. Impact of regulated price adjustments on price variability in a very low inflation transition economy: Case of Armenia By Aghassi Mkrtchyan
  6. Property Condition Disclosure Law: Why Did States Mandate 'Seller Tell All'? By Anupam Nanda
  7. What determines protection of property rights ? An analysis of direct and indirect effects By Maksimovic, Vojislav; Demirguc-Kunt, Asli; Ayyagari, Meghana
  8. Financial Deregulation and Economic Growth in the Czech Republic, Hungary and Poland By Patricia McGrath; ;

  1. By: Gil, Ricard (University of California, Santa Cruz)
    Abstract: In this paper, we model competition between legal and pirate products. In our framework, the government affects this competition through police spending and taxes on legal products. Therefore, the government can choose the combination of spending and taxes that best fits its goals. We find that governments that focus entirely on eradicating piracy use lower levels of taxes and police spending than governments that focus on maximizing consumption, consumer surplus, welfare or government size. This result highlights the importance of demand side policies in the fight against piracy and posts a challenge to the traditional solo approach of supply side policies.
    Keywords: piracy; pirate products; intellectual property rights; illegal copying; demand side policies;
    Date: 2006–03–03
  2. By: John M Abbott; R. B. Johnston
    Abstract: Assessing financial systems' stability has required the IMF to dig deeper into financial sector issues and to include financial integrity elements in its assessments. Integrity elements are increasingly being addressed by international standards. More progress is needed, however, to prepare a comprehensive framework to prevent the abuse of the financial systems by both outsiders and insiders.
    Keywords: Financial systems , Financial crisis , Emerging markets , International Capital markets , Anti-money laundering , Combating the financing of terrorism , Standards and codes ,
    Date: 2005–03–30
  3. By: David Marston
    Abstract: The relationship between the observance of financial system standards and financial stability is complex owing to the multitude of macroeconomic and structural factors affecting stability. Therefore, assessments of standards in terms of technical criteria for compliance needs to be reinforced with additional information on other factors affecting risks in order to assess financial stability. Preliminary evidence from country data on observance of Basel Core Principles (BCPs) suggests that indicators of credit risk and bank soundness are primarily influenced by macroeconomic and macroprudential factors and that the direct influence of compliance with Basel Core Principles on credit risk and soundness is insignificant. BCP compliance could, however, influence risk and soundness indirectly through its influence on the impact of other macro variables.
    Keywords: Financial systems , Bank supervision ,
  4. By: Robert Dekle; Kenneth Kletzer
    Abstract: A model of the domestic financial intermediation of foreign capital inflows based on agency costs is developed for studying financial crises in emerging markets. In equilibrium, the banking system becomes progressively more fragile under imperfect prudential regulation and public sector loan guarantees until a crisis occurs with a sudden reversal of capital flows. The crisis evolves endogenously as the banking system becomes increasingly vulnerable through the renegotiation of loans after idiosyncratic firm-specific revenue shocks. The model generates dynamic relationships between foreign capital inflows, domestic investment, corporate debt and equity values in an endogenous growth model. The model's assumptions and implications for the behavior of the economy before and after crisis are compared to the experience of five East Asian economies. The case studies compare three that suffered a crisis or near-crisis, Thailand and Malaysia, to two that did not, Taiwan Province of China and Singapore, and lend support to the model.
    Keywords: Bank regulations , Asia , Financial crisis , Exchange rate regimes , Capital inflows , Economic models ,
  5. By: Aghassi Mkrtchyan
    Abstract: This paper examines the impact of monetary policy and administrative price adjustments on price variability in a low inflation economy characterized by relatively frequent administrative price adjustments. Fluctuations of market determined prices, prices of agricultural goods in particular, are linked to poor synchronization between administrative price changes and monetary policy. If monetary policy does not account for expected changes in administrative prices, demand for free goods shifts, causing fluctuation of prices for agricultural goods, because the supply of these goods is highly inelastic in Armenia. The findings contribute to a better understanding of agricultural price variability during 1998-2002. The impact of macroeconomic policy and structural adjustments on income distribution and rural poverty incidence are also examined. This research has immediate policy implications, since Armenia will continue to undergo major upward price adjustments of regulated prices, which may have a negative impact on income distribution unless aggregate demand management is changed.
    JEL: E31 E65 E61
    Date: 2005–06–01
  6. By: Anupam Nanda (National Association of Home Builders and University of Connecticut)
    Abstract: Thirty-six US states have already enacted some form of seller's property condition disclosure law. At a time when there is a movement in this direction nationally, this paper attempts to ascertain the factors that lead states to adopt disclosure law. Motivation for the study stems from the fact that not all states have yet adopted the law, and states that have enacted the law have done so in different years. The analytical structure employs hazard models, using a unique set of economic and institutional attributes for a panel of 50 US States spanning 21 years, from 1984 to 2004. The proportional hazard analysis of law adoption reveals that greater number of disciplinary actions tends to favor passage of the law. Greater broker supervision, implying generally higher awareness among real estate agents, seems to have a negative impact on the likelihood of a state adopting a property condition disclosure law.
    Keywords: Property Condition Disclosure, Law Adoption, Hazard Analysis, Housing Price Index
    JEL: C41 D82 K11 L51 L85 R52
    Date: 2006–06
  7. By: Maksimovic, Vojislav; Demirguc-Kunt, Asli; Ayyagari, Meghana
    Abstract: Using cross-country data, the authors evaluate historical determinants of protection of property rights. They examine four historical theories that focus on conceptually distinct causal variables believed to shape institutions: legal origin, endowments, ethnic diversity, and religion. There is only one realization of the data with relatively few observations, which have by now been well explored in the literature. Given the correlations between the explanatory variables, it is difficult to fashion empirical tests which are consistent in their treatment of the competing theories and to know which regressions to take seriously, giving rise to competing interpretations in the literature. The authors use Directed Acyclic Graph (DAG) methodology to identify which historical factors are direct determinants of property rights protection and which are not, and subject the outcomes to a battery of robustness tests. The empirical results support ethnic fractionalization as a robust determinant of property rights protection. Despite the attention it has received in the literature, the impact of legal origin on protection of property rights appears fragile and dependent on the inclusion of transition economies in the sample.
    Keywords: Legal Institutions of the Market Economy,Judicial System Reform,Anthropology,Gender and Law,Legal Products
    Date: 2006–06–01
  8. By: Patricia McGrath; ;
    Abstract: Advocates of financial regulation, Arestis and Demetriades, argue that financial liberalisation does not impact on financial market efficiency and the allocation of investment. Results in this study find that Czech, Hungarian and Polish firms are subject to scrutiny when applying for credit. The firm’s ability to provide collateral, the potential of the proposed investment project and individual financial backgrounds are all factors that are used before loans are offered, and it likely that allocational efficiency is strengthened in these circumstances, and not weakened. Stiglitz has the view that financial repression improves the quality of the pool of loans. Results here indicate that companies in these countries previously had very limited access to credit while government owned companies and government projects received the bulk of credit. After deregulation it became apparent that the quality of the pool of loans was very poor. This study supports Shaw’s assertion that financial deregulation improves financial deepening.
    Keywords: Transition Economies, Industrial Development, Financial Deregulation, Economic Growth, Eastern Europe
    JEL: G G2 G21
    Date: 2005–11–01

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