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on Regulation |
| By: | David, DE LA CROIX (UNIVERSITE CATHOLIQUE DE LOUVAIN, Department of Economics); Clara, DELAVALLADE |
| Abstract: | Corruption is thought to prevent poor countries from catching-up. We analyze one channel through which corruption hampers growth : public investment can be distorted in favor of specific types of spending for which rent-seeking is easier and better concealed. To study this distortion, we propose an optimal growth model where households vote for the composition of public spending subject to an incentive constraint reflecting individualsÕ choice between productive activity and rent-seeking. At equilibrium, the intensity of corruption and the structure of public investment are determined by the predatory technology and the distribution of political power. Among different regimes, the model shows a possible scenario of distortion without corruption in which there is no effective corruption yet still the possibility of corruption distorts the allocation of public investment, thus hampering growth. We test the implications of the model on a panel of countries estimating a system of equations which instrumental variables. We find that countries with a high predatory technology invest more in housing and physical capital in comparison with health and education. For equal initial conditions, such countries grow slower and have higher corruption, in particular when political power is concentrated |
| Keywords: | Public investment, Optimal growth, Corruption, Political power |
| JEL: | H50 D73 |
| Date: | 2006–10–26 |
| URL: | http://d.repec.org/n?u=RePEc:ctl:louvec:2006057&r=reg |
| By: | Cafaggi, Fabrizio; Muir Watt, Horatia |
| Abstract: | The current debate on the desirability and modes of formation of European Private Law (“EPL”) is engaging a wide number of scholars and institutions. Current work concerns the search for a common core of EPL, the rationalisation of the acquis communautaire, the design of a European Civil Code. These ongoing projects raise at least two related questions concerning the challenges to Europeanisation of private law: First, what is the often implicit definition of private law standing behind the debate about the creation of EPL? Second, does the process of creation of EPL need some type of governance structure? In this paper, we thus intend to contribute to a better understanding of these two dimensions of the debate. First, we wish to highlight the internal transformation of private law and its increasing regulatory function to be considered in governance design. If we take into consideration the internal transformation of private law and its increasing regulatory function in addition to the role of private law in regulated sectors, we witness several phenomena that require consideration in the governance design, such as the change of private law sources, and the procedural nature of Europeanisation. Within this framework it is important to identify the interplay between EPL and private international law. The role of private international law (“PIL”) as a vehicle to ensure choice of rules for private parties might change quite considerably depending on the choices concerning private law rules, in particular whether there is harmonisation and which kind of private law rules are adopted. The role of PIL may also depend on the level at which rules are produced. Second, we address the issue of the appropriate governance structure. In other words, does EPL need a governance structure that will accompany its formation, consolidation and changes? More on the point, is there a link between the governance design and the definition of EPL? |
| Keywords: | European law; harmonisation; regulation; regulatory competition; private international law; multilevel governance |
| Date: | 2007–03–20 |
| URL: | http://d.repec.org/n?u=RePEc:erp:eurogo:p0013&r=reg |
| By: | Bastos Vareda, João Miguel; Hoernig, Steffen |
| Abstract: | We analyze the impact of mandatory access on the infrastructure investments of two competing communications networks, and show that for low (high) access charges firms wait (preempt each other). Contrary to previous results, under preemption a higher access charge can delay first investment. Constant access tariffs cannot achieve the first best. Optimal time-variant access tariffs may be increasing or decreasing over time. The first-best cannot be achieved at all through access tariff regulation if the follower’s private incentives are dominated by business-stealing. Here access holidays can improve welfare by allowing for lower future access charges, which delay the second investment. |
| Keywords: | Access holidays; Investments; Preemption; Time-variant access charges |
| JEL: | D92 L43 L51 L96 |
| Date: | 2007–03 |
| URL: | http://d.repec.org/n?u=RePEc:cpr:ceprdp:6203&r=reg |
| By: | Francesco Caselli; Nicola Gennaioli |
| Abstract: | We compare the economic consequences and political feasibility of reforms aimed at reducingbarriers to entry (deregulation) and improving contractual enforcement (legal reform). Deregulationfosters entry, thereby increasing the number of firms (entrepreneurship) and the average quality ofmanagement (meritocracy). Legal reform also reduces financial constraints on entry, but in addition itfacilitates transfers of control of incumbent firms, from untalented to talented managers. Since whenincumbent firms are better run entry by new firms is less profitable, in general equilibrium legalreform may improve meritocracy at the expense of entrepreneurship. As a result, legal reformencounters less political opposition than deregulation, as it preserves incumbents' rents, while at thesame time allowing the less efficient among them to transfer control and capture (part of) the resultingefficiency gains. Using this insight, we show that there may be dynamic complementarities in thereform path, whereby reformers can skillfully use legal reform in the short run to create a constituencysupporting future deregulations. Generally speaking, our model suggests that "Coasian" reformsimproving the scope of private contracting are likely to mobilize greater political support because —rather than undermining the rents of incumbents — they allow for an endogenous compensation oflosers. Some preliminary empirical evidence supports the view that the market for control ofincumbent firms plays an important role in an industry's response to legal reform. |
| Keywords: | financial economics, deregulation, meritocracy |
| JEL: | G34 O11 O16 |
| Date: | 2007–01 |
| URL: | http://d.repec.org/n?u=RePEc:cep:cepdps:dp0775&r=reg |
| By: | William R. Emmons; Gregory E. Sierra |
| Keywords: | Bank loans ; Bank capital ; Bank supervision |
| Date: | 2006 |
| URL: | http://d.repec.org/n?u=RePEc:fip:fedlsp:2006-02&r=reg |
| By: | Hochberg, Yael; Sapienza, Paola; Vissing-Jorgensen, Annette |
| Abstract: | We evaluate the net benefits of the Sarbanes-Oxley Act (SOX) for shareholders by studying the lobbying behaviour of investors and corporate insiders to affect the final implemented rules under the Act. Investors lobbied overwhelmingly in favour of strict implementation of SOX, while corporate insiders and business groups lobbied against strict implementation. We identify the firms most affected by the law as those whose insiders lobbied against strict implementation, and compare their returns to the returns of less affected firms. Cumulative returns during the four and a half months leading up to passage of SOX were approximately 10 percent higher for corporations whose insiders lobbied against one or more of the SOX disclosure-related provisions than for similar non-lobbying firms. Analysis of returns in the post-passage implementation period indicates that investors’ positive expectations with regards to the effects of the law were warranted for the enhanced disclosure provisions of SOX. |
| Keywords: | Corporate Governance; Sarbanes Oxley Act |
| JEL: | G34 K22 |
| Date: | 2007–03 |
| URL: | http://d.repec.org/n?u=RePEc:cpr:ceprdp:6201&r=reg |
| By: | John Schmitt; David Howell |
| Abstract: | The widely held view that French economic performance is poor and that French employment performance is catastrophic, flies in the face of the evidence, according to this report. |
| Date: | 2006–04 |
| URL: | http://d.repec.org/n?u=RePEc:epo:papers:2006-6&r=reg |
| By: | Ilan Noy (Department of Economics, University of Hawaii at Manoa); Tam B. Vu (Department of Economics, University of Hawaii at Hilo) |
| Abstract: | We examine the impact of capital account policies on FDI inflows. Using an annual panel dataset of 83 developing and developed countries for 1984-2000, we find that capital account openness is positively but only very moderately associated with the amount of FDI inflows after controlling for other macroeconomic and institutional measures. To a large extent, other country characteristics seem to determine FDI inflows instead of capital account policies. Furthermore, we find that capital controls are easily circumvented in corrupt and politically unstable regimes. We conclude that liberalizing the capital account is not sufficient to generate increases in inflows unless it is accompanied by a lower level of corruption or a decrease in political risk. |
| Keywords: | Foreign direct investment, capital controls, capital flows, capital account liberalization |
| JEL: | F21 F36 |
| Date: | 2007–03 |
| URL: | http://d.repec.org/n?u=RePEc:hai:wpaper:200708&r=reg |
| By: | Paniagua Zurera, Manuel |
| Abstract: | The variability of share capital is the technical instrument used by cooperative, national and Community law to achieve the fulfilment of the cooperative principle of voluntary adhesion and voluntary withdrawal. Progressively, the regime of cooperative share capital has added rules and techniques of business corporations. The interpretative standard IFRIC 2, and the IAS 32 itself, do not know the singularities of the co-operative model of business organization, as they are designed for limited corporations or, at least, for those that issue quoted securities; and they ignore the referred evolution in the legal regime of the cooperative share capital. Nevertheless, cooperative societies can not be left aside of the international accounting standards. The IAS 32 itself provides the appropriate instrument to qualify the cooperative shares: compound financial instruments. But, research of the imminent reform of cooperative share capital in the State Law of Cooperatives reveals rush and non critical reception of the mentioned international accounting standards |
| Keywords: | Cooperative share capital. Liability. Compound financial instrument. Reform of the state legislation on cooperatives |
| JEL: | M41 P13 |
| Date: | 2006 |
| URL: | http://d.repec.org/n?u=RePEc:pra:mprapa:2410&r=reg |
| By: | Adam B. Ashcraft; Astrid A. Dick; Donald P. Morgan |
| Abstract: | Thousands of U.S. households filed for bankruptcy just before the bankruptcy law changed in 2005. That rush-to-file was more pronounced, we find, in states with more generous bankruptcy exemptions and lower credit scores. We take that finding as evidence that the new law effectively reduces exemptions, which in turn should reduce the ?demand? for bankruptcy and the resulting losses to suppliers of consumer credit. We expect the savings to suppliers will be shared with borrowers by way of lower credit card rates, although credit card spreads have not yet fallen. If cheaper credit is the upside of the new law, the downside is reduced bankruptcy ?insurance? against bad luck. The overall impact of the new law on the average household depends on how one weighs those two sides. |
| Keywords: | Bankruptcy ; Consumer credit |
| Date: | 2007 |
| URL: | http://d.repec.org/n?u=RePEc:fip:fednsr:279&r=reg |
| By: | Pastor Sempere, Mª del Carmen |
| Abstract: | The following contribution focuses on the central role placed by economic regulatations in cooperatives, analysing by NIC and its presence and influence. |
| Keywords: | Social Capital; NIC; coopertives societies |
| JEL: | P13 |
| Date: | 2006 |
| URL: | http://d.repec.org/n?u=RePEc:pra:mprapa:2412&r=reg |
| By: | Raouf, BOUCEKKINE (UNIVERSITE CATHOLIQUE DE LOUVAIN, Department of Economics); Marc, GERMAIN (UNIVERSITE CATHOLIQUE DE LOUVAIN, Center for Operations Research and Econometrics (CORE)) |
| Abstract: | The burden sharing of pollution abatement costs raises the issue of how to share the costs between entities (country, region or industry) and how the pollution permits should be distributed between the parties involved. This paper explores this issue in the framework of a dynamic endogenous growth 2 sectors - 2 regions - 2 inputs Heckscher-Ohlin model of a small open multi-regional economy with an international tradable permits market. Give an Òemission-based grand-fatheringÓ sharing rule, capital accumulation is more negatively affected by the environmental policy in the energy intensive sector. We show that such a property does not necessarily hold with a Òproduction-based grand-fatheringÓ sharing rule. We also show that the impact on capital is likely to translate into the sectoral added value level after some time, specially if the economy is submitted to an increasingly constraining environmental policy driving up the ratio price of permits to price of energy. Finally, we show that the impact of environmental policy at the regional level depends crucially on the specialization of the region along the baseline. |
| Keywords: | Pollution permits, Grand-fathering, Sectoral spillovers, Multi-regional economy, Endogenous growth |
| JEL: | D58 H21 E22 O40 |
| Date: | 2007–03–27 |
| URL: | http://d.repec.org/n?u=RePEc:ctl:louvec:2007010&r=reg |