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on Regulation |
| By: | Luigi Zingales (University of Chicago Booth School of Business); Oliver Hart (Harvard University & NBER) |
| Abstract: | We design a new, implementable capital requirement for large financial institutions (LFIs) that are too big to fail. Our mechanism mimics the operation of margin accounts. To ensure that LFIs do not default on either their deposits or their derivative contracts, we require that they maintain an equity cushion sufficiently great that their own credit default swap price stays below a threshold level, and a cushion of long term bonds sufficiently large that, even if the equity is wiped out, the systemically relevant obligations are safe. If the CDS price goes above the threshold, the LFI regulator forces the LFI to issue equity until the CDS price moves back down. If this does not happen within a predetermined period of time, the regulator intervenes. We show that this mechanism ensures that LFIs are always solvent, while preserving some of the disciplinary effects of debt. |
| Keywords: | Banks, Capital Requirement, Too Big to Fail |
| JEL: | G21 G28 |
| Date: | 2009–12 |
| URL: | http://d.repec.org/n?u=RePEc:fem:femwpa:2009.124&r=reg |
| By: | Etienne Bordeleau; Allan Crawford; Christopher Graham |
| Abstract: | The Basel capital framework plays an important role in risk management by linking a bank's minimum capital requirements to the riskiness of its assets. Nevertheless, the risk estimates underlying these calculations may be imperfect, and it appears that a cyclical bias in measures of risk-adjusted capital contributed to procyclical increases in global leverage prior to the recent financial crisis. As such, international policy discussions are considering an unweighted leverage ratio as a supplement to existing risk-weighted capital requirements. Canadian banks offer a useful case study in this respect, having been subject to a regulatory ceiling on an unweighted leverage ratio since the early 1980s. The authors review lessons from the Canadian experience with leverage constraints, and provide some empirical analysis on how such constraints affect banks' leverage management. In contrast to a number of countries without regulatory constraints, leverage at major Canadian banks was relatively stable leading up to the crisis, reducing pressure for deleveraging during the economic downturn. Empirical results suggest that major Canadian banks follow different strategies for managing their leverage. Some banks tend to raise their precautionary buffer quickly, through sharp reductions in asset growth and faster capital growth, when a shock pushes leverage too close to its authorized limit. For other banks, shocks have more persistent effects on leverage, possibly because these banks tend to have higher buffers on average. Overall, the authors' results suggest that a leverage ceiling would be a useful tool to complement risk-weighted measures and mitigate procyclical tendencies in the financial system. |
| Keywords: | Financial institutions; Financial stability; Financial system regulation and policies |
| JEL: | G28 G21 |
| Date: | 2009 |
| URL: | http://d.repec.org/n?u=RePEc:bca:bocadp:09-15&r=reg |
| By: | Michel Magnan; Daniel Thornton |
| Abstract: | The paper provides a genesis of fair value accounting (FVA) and reviews some research and empirical evidence that are relevant to the debate surrounding its use. We also comment on FVA’s role in the financial crisis: was it just the messenger of bad news or was it “procyclical,” contributing to the sad state of the economy in addition to reporting on it? We briefly characterize FVA as comprising three levels of valuation: level 1 for assets/liabilities for which market values are directly observable, level 2 for assets/liabilities for which market-derived inputs, but not prices, are observable and level 3 for assets/liabilities which value is derived from models. We conclude that the use of FVA by regulators was probably procyclical for level 1 FVA assets, i.e., those assets which accounting values were based upon directly observable market prices. In contrast, accounting values for FVA assets that were not actively traded (levels 2 and 3) probably lagged market developments and were likely biased in their valuation. Our analysis also suggests that the appropriateness of FVA-derived valuation is conditional upon market conditions (efficiency and liquidity), and that fundamental valuation drivers such as an asset/ liability underlying cash flows are still relevant valuation inputs despite the existence of concurrent market prices. The paper concludes with some observations regarding the role of auditors, regulators, standard-setters and investors regarding FVA-derived information. <P>Le document présente une genèse de la comptabilisation à la juste valeur et revoit certains travaux de recherche et certaines preuves empiriques qui sont pertinents dans le cadre du débat entourant le recours à cette méthode. Nous commentons aussi le rôle de la comptabilisation à la juste valeur dans le contexte de la crise financière : a-t-elle simplement été un indicateur de mauvaises nouvelles ou a-t-elle été « procyclique », c’est-à-dire a-t-elle contribué à la triste situation économique en plus d’informer sur celle-ci ? Nous décrivons brièvement la comptabilisation à la juste valeur comme étant constituée de trois niveaux d’évaluation : le niveau 1 pour les actifs/passifs dont la valeur de marché est directement observable ; le niveau 2 pour les actifs/passifs dont les données issues du marché, mais non les prix, sont observables ; et le niveau 3 pour les actifs/passifs dont la valeur est obtenue à partir de modèles. Nous concluons que le recours à la méthode de comptabilisation à la juste valeur par les organismes de réglementation a probablement été procyclique dans le cas des éléments d’actif du niveau 1 évalués selon cette méthode, c’est-à-dire les actifs dont les valeurs comptables était fondées sur les prix du marché directement observables. En comparaison, les valeurs comptables établies selon la comptabilisation à la juste valeur dans le cas des éléments d’actif qui n’étaient pas fortement négociés (niveaux 2 et 3) ont probablement pris du recul par rapport à l’évolution du marché et ont vraisemblablement fait l’objet d’opinions biaisées quant à leur estimation. Notre analyse permet aussi de penser que la pertinence de l’évaluation selon la comptabilisation à la juste valeur est tributaire des conditions du marché (efficience et fluidité) et que les facteurs d’évaluation fondamentaux, dont les flux de trésorerie sous-jacents aux actifs/passifs, sont toujours pertinents malgré l’existence de prix du marché parallèles. En terminant, le document offre des observations au sujet du rôle des vérificateurs, des organismes de réglementation et de normalisation, ainsi que des investisseurs en ce qui a trait à l’information qui se dégage de la comptabilisation à la juste valeur. |
| Keywords: | Fair value accounting, procyclicality, liquidity crisis, fair market value, market efficiency, bubble, comptabilisation à la juste valeur, procyclicalité, crise de liquidité, juste valeur marchande, efficience du marché, bulle |
| Date: | 2009–12–01 |
| URL: | http://d.repec.org/n?u=RePEc:cir:cirwor:2009s-47&r=reg |
| By: | Vo Thi Quynh Anh (Norges Bank (Central Bank of Norway)) |
| Abstract: | Prompt Corrective Action (PCA) is a system of predetermined capital/asset ratios that trigger supervisory actions by a banking regulator. Our paper addresses the optimality of this regulation system by dapting a dynamic model of entrepreneurial finance to banking regulation. In a dynamic moral hazard setting, we first derive the optimal contract between the banker and the regulator and then implement it by a menu of regulatory tools. Our main findings are the following: first, the insurance premium is a risk-based premium where the risk is measured by the capital level; second, our model implies a capital regulation system that shares several similarities with the US PCA. According to our proposed system, regulatory supervision should be realized in the spirit of gradual intervention and the book-value of capital is used as information to trigger intervention. Banks with high capital are not subject to any restrictions. Dividend distribution is prohibited in banks with intermediate level of capital. When banks have low capital level, a plan of recapitalization is required and in the worst case, banks are placed in liquidation. |
| Keywords: | Prompt Corrective Action, Capital Regulation, Dynamic Contracting, Recapitalization |
| JEL: | D82 G21 G28 |
| Date: | 2009–12–01 |
| URL: | http://d.repec.org/n?u=RePEc:bno:worpap:2009_28&r=reg |
| By: | Jean-Pierre Amigues; Ujjayant Chakravorty; Michel Moreaux |
| Date: | 2009–12 |
| URL: | http://d.repec.org/n?u=RePEc:ler:wpaper:09.30.306&r=reg |
| By: | Burtraw, Dallas (Resources for the Future); Szambelan, Sarah Jo |
| Abstract: | The U.S. Clean Air Act Amendments of 1990 initiated the first large experiment in the use of market-based regulation to control environmental problems with the introduction of an emissions trading program for sulfur dioxide emissions. Later that decade the second large trading program began for control of nitrogen oxide emissions. Although these programs are widely viewed as successful, their development and the emergence of associated environmental markets took various turns that provide lessons for the development of new markets, including markets for greenhouse gas emissions. This paper reviews the history of these programs and provides a glimpse of their future given the introduction of new regulations affecting multiple pollutants and given the expected implementation of climate policy. |
| Keywords: | market-based regulation, Clean Air Act, electricity generation, air pollution, sulfur dioxide, nitrogen oxides |
| JEL: | H23 Q25 Q28 D78 |
| Date: | 2009–10–15 |
| URL: | http://d.repec.org/n?u=RePEc:rff:dpaper:dp-09-40&r=reg |
| By: | Gopalan, Sasidaran; Rajan, Ramkishen. S |
| Abstract: | Over the last decade many emerging Asian economies have been liberalizing their financial sectors, including opening up of their banking systems to foreign competition. This paper examines the extent of de jure and de facto policies in Asia with regard to the introduction of greater foreign competition. To preview the main conclusion, while there has clearly been greater international financial liberalization in the region, Asia lags behind emerging Europe and Latin America when it comes to the relative significance of foreign banks in their respective domestic economies. The paper goes on to discuss possible reasons behind Asia’s relatively cautious approach towards this policy. |
| Keywords: | Financial sector de-regulation; Foreign bank entry; Emerging Asia |
| JEL: | G34 F36 |
| Date: | 2009–07–22 |
| URL: | http://d.repec.org/n?u=RePEc:pra:mprapa:19592&r=reg |
| By: | Sandeep Parekh |
| Abstract: | The takeover of substantial number of shares, voting rights or control in a listed Indian company attracts the provision of SEBI (Substantial Acquisition of Shares and Takeovers) Regulations 1997. The regulations have been amended nearly 20 times since inception, though the amendments have mainly concentrated on areas which needed no amendment. At the same time a vast number of obvious problems have not been rectified in the regulations. The large number of amendments have also created requirement of a compulsory tender offer of such unnecessary complexity as to make it virtually unintelligible to even a well qualified professional. |
| Date: | 2009–12–02 |
| URL: | http://d.repec.org/n?u=RePEc:iim:iimawp:2009-11-06&r=reg |
| By: | Ojo, Marianne |
| Abstract: | Based on the argument that the benefits conferred through the provision of non audit services by audit firms outweigh the attributed costs of safeguarding the auditor's independence, this paper will not only seek to justify this argument, advance proposals which do not favour an outright prohibition of the provision of non audit services, but also consider means through which non audit services could be regulated in order to facilitate competition in the audit market. At the same time it will consider various legislation which have been introduced in recent years and which are aimed at facilitating greater disclosure of information – hence improving transparency within the audit and financial markets. “Specific measures,” it is contended, “would involve not only the introduction of new standards (for example – the disclosure of client concentration) but also the elimination of current restrictions“. Different types of safeguards which exist in order “to mitigate or eliminate threats” to the auditor’s independence, as a result of the provision of non audit services, will be considered against the regulator’s aim to facilitate competition, enhance disclosure and promote other practices which would advance the regulator’s endeavour to be more “market friendly”. The consultation on control structures in audit firms and their consequences on the audit market, a consultation which was launched by the European Commission as part of its efforts to create more market players, could be regarded as a response to such proposals to facilitate a more “market friendly” environment and also to concerns that the financial market is already over regulated. Some of the possible ways advanced by the Commission as channels for facilitating greater entry into the international market include the deregulation of the capitalisation of audit firms as a catalyst for facilitating greater entry into the audit market. Deregulation of the capital structure in this sense is considered to be a “modification of Article 3 (4) of the 2006 Directive on Statutory Audit which should however not be to the detriment of robust independence rules.” |
| Keywords: | Principles based regulation; audit; directives; regulation; market; NAS (non audit services) |
| JEL: | K2 G18 G3 M42 |
| Date: | 2009–12–17 |
| URL: | http://d.repec.org/n?u=RePEc:pra:mprapa:19408&r=reg |
| By: | Paul Conway; Tatiana Lysenko; Geoff Barnard |
| Abstract: | This paper uses the OECD’s indicators of product market regulation (PMR) to assess the extent to which the regulatory environment in Russia supports competition and to draw attention to the areas where further reform efforts would pay dividends. The indicators show that, despite improvements in some areas, many aspects of Russia’s regulatory framework are still restrictive, which provides considerable scope for reaping gains from bringing regulation into line with international best practice. In particular, the scores suggest that Russia’s economic performance would greatly benefit from a reduction in the role of the state enterprise sector in markets that are inherently competitive and reinvigorated efforts to liberalise foreign trade and direct investment regimes. In some network sectors, recent regulatory changes have significantly improved the scope for competition. However, ongoing work needs to focus on separating competitive and monopoly market segments and eliminating barriers to entry. In addition, the authorities need to develop the capacity and strengthen the hands of the sectoral regulators. Introducing an overarching competition policy would also help bring the issue of competition to centre stage and spread a competition ethos through different levels of government.<P>La réglementation des marchés de produits en Russie<BR>Cette étude utilise les indicateurs de réglementation des marchés de produits (RMP) afin d'évaluer le degré auquel l'environnement réglementaire en Russie est favorable à la concurrence et d'identifier les domaines où des réformes supplémentaires seraient bénéfiques pour l'économie Russe. Les indicateurs révèlent que, malgré des améliorations dans certains domaines, plusieurs aspects de l'approche réglementaire restent restrictifs, ce qui laisse beaucoup de marge pour récolter des bénéfices économiques d'un alignement de la réglementation avec les meilleures pratiques internationales. En particulier, les valeurs des indicateurs suggèrent que la performance économique de la Russie bénéficierait de façon importante d'une réduction du rôle du secteur des entreprises publiques dans les marchés qui sont par nature concurrentiels et d'un renforcement des efforts pour libéraliser les régimes du commerce extérieur et de l'investissement direct étranger. Dans certaines industries de réseau, des changements réglementaires récents ont favorisé la concurrence. Cependant, un travail soutenu sera nécessaire afin de séparer les segments du marché qui sont par nature concurrentiels de ceux qui sont monopolistiques et d'éliminer les obstacles à la concurrence. Les autorités devraient aussi développer les capacités et renforcer les pouvoirs des régulateurs sectoriels. La création d'une politique globale de concurrence aiderait à mettre la question de concurrence au devant de la scène et de transmettre un esprit de la concurrence à travers les différents niveaux du gouvernement. |
| Keywords: | competition, corruption, foreign direct investment, growth, Russia, state ownership, trade, transition, concurrence, corruption, croissance, échanges, investissement direct étranger, propriété de l’État, réglementation des marchés de produits, Russie, transition |
| JEL: | F13 H1 H82 H83 K20 K21 L31 L32 L33 L4 L5 P2 P3 |
| Date: | 2009–12–15 |
| URL: | http://d.repec.org/n?u=RePEc:oec:ecoaaa:742-en&r=reg |
| By: | Palmer, Karen (Resources for the Future); Burtraw, Dallas (Resources for the Future); Paul, Anthony (Resources for the Future) |
| Abstract: | The regulation of greenhouse gas emissions from the electricity sector within a cap-and-trade system poses significant policy questions about how to allocate tradable emission allowances. Allocation conveys tremendous value and can have efficiency consequences. This research uses simulation modeling for the electricity sector to examine different approaches to allocation under a cap-and-trade program in California. The decision affects prices and other aspects of the electricity sector, as well as implications for the overall cost of climate policy. An important issue is the opportunity for emission reductions in California to be offset by emission increases in neighboring regions that supply electricity to the state. The amount of emission leakage (i.e. an increase in CO2 emissions outside of California as a result of the program) varies with the regulatory design of the program. |
| Keywords: | cap-and-trade, electricity generation, electricity sector, emissions, regulation, governance, allocation, California |
| JEL: | Q2 Q25 Q4 L94 |
| Date: | 2009–10–07 |
| URL: | http://d.repec.org/n?u=RePEc:rff:dpaper:dp-09-41&r=reg |
| By: | Gerard Caprio, Jr (Williams College, USA) |
| Abstract: | Most explanations of the crisis of 2007-2009 emphasize the role of the preceding boom in real estate and asset markets in a variety of advanced countries. As a result, an idea that is gaining support among various groups is how to make Basel II or any regulatory regime less procyclical. This paper addresses the rationale for and likely contribution of such policies. Making provisioning (or capital) requirements countercyclical is one way potentially to address procyclicality, and accordingly it looks at the efforts of the authorities in Spain and Colombia, two countries in which countercyclical provisioning has been tried, to see what the track record has been. As explained there, these experiments have been at best too recent and limited to put much weight on them, but they are much less favorable for supporting this practice than is commonly admitted. The paper then addresses concerns and implementation issues with countercyclical capital or provisioning requirements, including why their impact might be expected to be limited, and concludes with recommendations for developing country officials who want to learn how to make their financial systems less exposed to crises. |
| Keywords: | Safe, Sound Banking, Regulatory Requirements |
| JEL: | G10 G11 G14 G15 |
| URL: | http://d.repec.org/n?u=RePEc:iis:dispap:iiisdp311&r=reg |
| By: | Maria Nieswand; Astrid Cullmann; Anne Neumann |
| Abstract: | This paper provides an empirical demonstration for a practical approach of efficiency evaluation against the background of limited data availability in some regulated industries. Here, traditional DEA may result in a lack of discriminatory power when high numbers of variables but only limited observations are available. We apply PCA-DEA for radial efficiency measurement to US natural gas transmission companies in 2007. This allows us to reduce dimensions of the optimization problem while maintaining most of the variation in the original data. Our results suggest that the PCA-DEA methodology reduces the probability of over-estimation of the individual firm-specific performance. It also allows for a large number of original variables without substantially reducing the discriminatory power of the model.<br /> |
| Keywords: | Efficiency analysis, DEA, PCA, company regulation, natural gas transmission |
| JEL: | C14 L51 L95 |
| Date: | 2009 |
| URL: | http://d.repec.org/n?u=RePEc:diw:diwwpp:dp962&r=reg |
| By: | Cédric Clastres (LEPII - Laboratoire d'Économie de la Production et de l'Intégration Internationale - CNRS : UMR5252 - Université Pierre Mendès-France - Grenoble II, G2ELAB - Grenoble Electrical Engineering - Institut National Polytechnique de Grenoble - INPG - Université Joseph Fourier - Grenoble I); Laurent David (Research Division - Gaz de France) |
| Abstract: | Some European regulators have decided to force competition in their nationalmarkets. They have decided to go beyond the second directive and apply asymmetric regulation. Gas release programs and market shares constraints are the two asymmetric decisions imposed to incumbents. When a regulator imposes a gas release program to an incumbent, this operator is compelled to release quantities of its long term contracts to its competitor. In this paper, we will focus on gas release and its impact on welfare, consumer surplus and on the level of released quantities set by regulators. The aim of a gas release program is to give access to natural gas to competitors. They become actives on the market and are in competition with the incumbent. These programs are time limited. They only help competitors in expecting the development of hubs or new investments in importation infrastructures. If competitors want to stay active after the program, they may find others supply sources to increase security of supply. The gas release can induce Raising Rival's Costs or “Self-Sabotage” strategies. We use a Cournot model with capacity constraints to answer two questions. First, we will study the impact of these strategies on consumer surplus and welfare. We will show that there are no impact on consumer surplus but the welfare decreases. The gas release program introduces a transfer of profit between competitor and incumbent, reduces welfare because of the increase in costs of supply, but has no impact on total consumed quantities. Then, we will suppose that the regulator is setting released quantities maximising welfare. Gas release price is often based on costs plus a bid or a fixed premium. Quantities are set with a less obvious process. We will demonstrate that the regulator must set released quantities : - that would not be so high if incumbent's supplies are small to avoid Self- Sabotage or RRC strategies; - as a function of incumbent's supplies if they are in intermediate values to avoid strategies seen above and to optimise quantities sold on the market; - at a sufficient level to let the two operators playing their Cournot best reply function. Finally, we will conclude that the regulator can avoid RRC or Self-Sabotage strategies in maximising the welfare when it decides gas released quantities. Gathering from empirical studies, these quantities should not be so high in order to let a significant difference between the capacities of both competitor and incumbent to avoid collusive behaviours. |
| Keywords: | REGULATION ; MARCHE INTERIEUR ; GAZ NATUREL ; MARCHE CONCURRENTIEL ; GAS RELEASE |
| Date: | 2009–06 |
| URL: | http://d.repec.org/n?u=RePEc:hal:journl:halshs-00442213_v1&r=reg |
| By: | Ollinger, Michael; Moore, Danna |
| Abstract: | This report examines the impact of process regulations mandated under the Pathogen Reduction/Hazard Analysis and Critical Control Point (PR/HACCP) rule by the Food Safety and Inspection Service of USDA on food safety process control. The current level of food safety found in U.S. meat and poultry food products is a result of process and performance regulations and management-determined actions brought about by market incentives. Processing regulations include sanitation and other tasks related to food safety; management-determined actions include capital investment and other actions independent of process regulations, but possibly driven by performance standards. Performance standardsâregulations that allow manufacturers to reach an acceptable level of food safety in any manner they see fi tâare not a subject of this report. This study used the share of samples testing positive for Salmonella spp. as a measure of food safety process control in meat and poultry processing plants and found empirically that management-determined actions account for about two-thirds of the reduction in samples testing positive for Salmonella spp., while process regulations account for about a third of the reduction. The importance of process regulation varies, but accounts for 50 percent or more of process control in about a quarter of plants, and in some plants accounts for the entire process control system. |
| Keywords: | food safety, process regulations, Hazard Analysis and Critical Control Point (HACCP) rule, food safety regulations, Agricultural and Food Policy, Food Consumption/Nutrition/Food Safety, Institutional and Behavioral Economics, |
| Date: | 2009–07 |
| URL: | http://d.repec.org/n?u=RePEc:ags:uersrr:55837&r=reg |
| By: | Laszlo Goerke; Markus Pannenberg |
| Abstract: | Severance pay is a vital part of employment protection legislation (EPL). We investigate the incidence and level of severance pay for dismissed employees. Our theoretical model predicts that not only the law and its interpretation by labour courts but also the costs of a suit have an impact. Using West German panel data for 1991-2006, we find that the employees\' costs resulting from a suit and the legal determinants of such transfers affect the incidence of severance payments. In contrast, their level only varies with legal regulations. Our results imply that the strictness of EPL in Germany varies with extra-legal factors like employees\' financial constraints. |
| Keywords: | employment protection legislation, labour law, severance pay, survey data |
| JEL: | J K C C |
| Date: | 2009–11–17 |
| URL: | http://d.repec.org/n?u=RePEc:got:cegedp:87&r=reg |
| By: | Katherine Hempstead (The Center for State Health Policy Rutgers, The State University of New Jersey); Antonio Rodríguez (School of Public Health, Department of Health Services Research, University of Aarhus) |
| Abstract: | Suicide is a major cause of preventable death. Restricting access to lethal means has been identified as an effective approach to suicide prevention, and firearms regulations are one way to reduce gun availability. This study examines the relationship between state firearms regulations and suicide among males, using negative binomial regression and state panel data for the years 1995–2004. Results suggest that firearms regulations which function to reduce overall gun availability have a significant deterrent effect on suicide, while prohibited persons categories have less of an effect. Overall, the results suggest that gun control measures such as permit and licensing requirements might have public health benefits. |
| Keywords: | suicide, guns, state regulations, panel data |
| JEL: | I18 |
| Date: | 2009–12 |
| URL: | http://d.repec.org/n?u=RePEc:adv:wpaper:200917&r=reg |
| By: | Ana Espinola-Arredondo; Felix Munoz-Garcia (School of Economic Sciences, Washington State University) |
| Abstract: | This paper examines countries’ free-riding incentives in international environmental agreements (IEAs) when, first, the treaty is non-enforceable, and second, countries do not have complete information about other countries’ noncompliance cost. We analyze a signaling model whereby the country leading the negotiations of the international agreement can reveal its own noncompliance costs through the commitment level it signs in the IEA. Our results show that countries’ probability to join the IEA is increasing in the free-riding benefits they can obtain from other countries’ compliance, and decreasing in their own noncompliance costs. This paper shows that, when free-riding incentives are strong enough, there is no equilibrium in which all types of countries join the IEA. Despite not joining the IEA, countries invest in clean technologies. Finally, we relate our results with some common observations in international negotiations. |
| Keywords: | Signaling games, environmental agreements, nonbinding negotiations, noncom- pliance cost. |
| JEL: | C72 D62 Q28 |
| Date: | 2009–03 |
| URL: | http://d.repec.org/n?u=RePEc:wsu:wpaper:munoz-3&r=reg |
| By: | Christian A. L. Hilber; Frédéric Robert-Nicoud |
| Abstract: | We model residential land use constraints as the outcome of a political economy game betweenowners of developed and owners of undeveloped land. Land use constraints benefit the former group(via increasing property prices) but hurt the latter (via increasing development costs). More desirablelocations are more developed and, as a consequence of political economy forces, more regulated.Using an IV approach that directly follows from our model we find strong and robust support for ourpredictions. The data provide weak or no support for alternative hypotheses whereby regulationsreflect the wishes of the majority of households or efficiency motives. |
| Keywords: | Land use regulations, zoning, land ownership, housing supply |
| JEL: | H7 Q15 R52 |
| Date: | 2009–12 |
| URL: | http://d.repec.org/n?u=RePEc:cep:cepdps:dp0964&r=reg |
| By: | Rock Lefebvre (Certified General Accountants Association of Canada); Elena Simonova (Certified General Accountants Association of Canada); Mihaela Scarlat (Certified General Accountants Association of Canada) |
| Abstract: | Fair value convention has polarized two opposing views – the first, that fair value accounting compounds economic hardship and distortion – and the second, that fair value accounting affords an accurate rendering of the market value of underlying assets and liabilities. This paper intends to clarify some of the underlying arguments by presenting a brief overview of fair value accounting, and the main advantages and disadvantages of using fair value regime. The analysis shows that only certain assets and liabilities are required to be measured at fair value and the degree to which unrealized gains and losses associated with fair value measurement are reflected in the financial statements depends on the intended use of assets and liabilities in question. The two main arguments against fair value accounting – exacerbated procyclicality and increased volatility of the financial statements – are amply counterbalanced by arguments in favour of fair value accounting. The latter includes the significance of limitations associated with historical cost accounting, increased relevance of information presented to investors and lower expected likelihood of earnings management under fair value accounting. |
| Keywords: | fair value accounting, accounting, accounting standards |
| JEL: | M41 G18 G15 |
| Date: | 2009–12 |
| URL: | http://d.repec.org/n?u=RePEc:cga:wpaper:091205&r=reg |
| By: | Barrett, Scott; Toman, Michael |
| Abstract: | This paper explores two different conceptions of how an emerging climate regime might evolve to strengthen incentives for more vigorous cooperation in mitigating global climate change. One is the paradigm that has figured most prominently in negotiations to this point: the establishment of targets and timetables for countries to limit their aggregate greenhouse gas emissions. The other approach consists of a variety of loosely coordinated smaller scale agreements, each one of which addresses a different aspect of the challenge, and is enforced in its own way. The primary conclusion is that an agreement of the first type may be more cost-effective, but that a system of agreements of the second type would likely sustain more abatement overall. |
| Keywords: | Climate Change Mitigation and Green House Gases,Climate Change Economics,Montreal Protocol,Environmental Economics&Policies,Transport Economics Policy&Planning |
| Date: | 2010–01–01 |
| URL: | http://d.repec.org/n?u=RePEc:wbk:wbrwps:5164&r=reg |