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on Regulation |
| By: | Ulrich Bindseil; Jeroen Lamoot |
| Abstract: | Basel III introduces for the first time an international framework for liquidity risk regulation, reflecting the experience of excessive liquidity risk taking of banks in the run up to the financial crisis that erupted in August 2007, and associated negative externalities. As central banks play a crucial role in the liquidity provision to banks during normal times and in a financial crisis, the treatment of central bank operations in the regulation is obviously important. To ensure internalisation of liquidity risks (i.e. pricing of liquidity risk) and to address excessive reliance ex ante on central bank liquidity support by the banks, the regulation deliberately does not establish a direct close link with the monetary policy operational framework. While this reflects the purpose of the regulation and is also natural outcome of an international rule being applied under a multitude of very different monetary policy operational frameworks, this paper shows that the interaction between the two areas can be substantial, depending on the operational and collateral framework of the central bank. This implies the need for further study and the development of policies at the central bank and regulatory/supervisory side on how to handle these potential interactions in practice. |
| Keywords: | Basle III, Liquidity Risk, Banking Regulation, monetary policy implementation |
| JEL: | E58 G21 G28 |
| Date: | 2011–07 |
| URL: | http://d.repec.org/n?u=RePEc:hum:wpaper:sfb649dp2011-041&r=reg |
| By: | Roychowdhury, Punarjit |
| Abstract: | It is claimed that introducing flexibility in regulation is a sufficient condition for curbing the level of informality in the developing world. This dissertation tries to test the validity of this claim using data for 46 countries over the time period 1980-2008 to explore the dynamics between regulation and informal employment. The empirical findings obtained using Panel Data regression point out that regulation does not significantly affect informality. What matters is the interaction between governance and regulation. Thus, it is established that the quality of governance and the institutions enforcing the regulation are more important in context of curbing the level of informality. In addition, the dissertation also tries to find out the most important instruments of regulation that a state can put to use in context of informality. |
| Keywords: | Informality; Regulation; Enforcement; Governance; Panel Data |
| JEL: | J08 L51 O17 J01 C40 L50 C33 L00 |
| Date: | 2011–06–15 |
| URL: | http://d.repec.org/n?u=RePEc:pra:mprapa:32150&r=reg |
| By: | Escobari, Diego |
| Abstract: | This paper presents a theoretical model of collusion and regulation in a wholesale electricity spot market. Given a demand for electricity, competing generators report their marginal costs. Then, only generators with the lowest marginal costs are selected to sell at a price equal to the marginal costs of the last generator selected to sell. The results show that under a fixed price level it is a weakly dominant strategy to truthfully report the marginal cost. Variable (or endogenous) prices create the possibility of profitable collusion among generators. With uncertainty in the marginal costs and risk neutrality, the results show that a necessary condition for collusion to be sustainable is that the marginal cost reported by the pivot (marginal generator) should be higher than the average of the true marginal costs of all the generators. The existence of collusion fines and audit probabilities were found to be effective in deterring collusion. It is also shown that more efficient generators have less incentive to collude. |
| Keywords: | Electricity; Regulation; Collusion. |
| JEL: | K20 L43 D43 |
| Date: | 2011–01 |
| URL: | http://d.repec.org/n?u=RePEc:pra:mprapa:32178&r=reg |
| By: | Mark Mink |
| Abstract: | We show that through facilitating maturity transformation, the lender of last resort gives banks an incentive to lever, diversify, and lower their lending standards. Bank leverage increases shareholder value because maturity transformation effectively allows banks to borrow against lower interest rates than their shareholders. Bank diversification increases shareholder value by enabling banks to lever more. When the gains from maturity transformation are passed on to bank customers, lending standards deteriorate. This risk-taking intensifies when the term spread is steeper, and is thus procyclically related to the stance of the macro-economy. Regulatory liquidity requirements can reduce all forms of risk-taking examined. |
| Keywords: | bank risk-taking; procyclicality; lender of last resort; financial regulation |
| JEL: | G21 G28 G32 |
| Date: | 2011–07 |
| URL: | http://d.repec.org/n?u=RePEc:dnb:dnbwpp:301&r=reg |
| By: | Battaglia, Lauren; Larouche, Pierre; Negrinotti, Matteo |
| Abstract: | This paper is the first of a larger project aimed at exploring, among other things, whether Europe has a consistent innovation policy in the context of EU economic law (competition policy, intellectual property law, sector regulation). As such, its primary aim is to present our approach for answering this question and outline the anticipated contributions of the project. Part I of the paper sets forth the theoretical foundations of the project--namely an integrated approach to economic law that moves beyond apparent conflicts and assumes innovation as the starting point. Taking this as the foundation, the two primary components of the project are described. First, a theoretical component involving the development of an analytical grid to be used to identify ways in which economic law impacts innovation, and second an applied component that explores observable instances where choices, both implicit and explicit, are made regarding innovation in economic law. Part II of the paper builds on this and offers a preliminary illustration of the proposed analysis in the context of pharmaceuticals, specifically drug reformulation regulatory gaming. |
| Keywords: | antitrust; economic law; innovation; pharmaceuticals |
| JEL: | K21 L41 O31 O34 O38 |
| Date: | 2011–07 |
| URL: | http://d.repec.org/n?u=RePEc:cpr:ceprdp:8481&r=reg |
| By: | Martin Schindler; Mariya Aleksynska |
| Abstract: | This paper documents a new database of labor market regulations during 1980-2005 in 91 countries, including low-, middle- and high-income countries, and contains information on unemployment insurance systems, minimum wage regulations, and employment protection legislation. In this paper, we provide details regarding the data, methodology and sources. Descriptive statistics indicate that there exists substantial heterogeneity in labor market institutions across regions and income groupings, and that much of the sample variation is driven by institutional changes over time in low- and middle-income countries. All indicators are at an annual frequency, allowing for the dating of major changes in regulation, and are based on data from a variety of sources, including the ILO, OECD and national agencies. |
| Date: | 2011–07–05 |
| URL: | http://d.repec.org/n?u=RePEc:imf:imfwpa:11/154&r=reg |
| By: | Massimiliano Badiali |
| Abstract: | The paper focuses on Federico Caffè’s outlook towards the problem of inflation. His attention for the claims of full employment didn’t prevent him from considering rigorously the negative impact of inflation on the economic system. His analysis stresses the incidence of «administrated prices» and the distributive conflict arising from labour market on the process leading to the growth of prices in contemporary society. The policies he suggested try to overcome the trade off between inflation and unemployment arose in twentieth century economies. Among the microeconomic policies, a public regulation of private prices is required as a constraint of the inflationary movement of prices of monopolistic and oligopolistic industries. His criticism on incomes policies practiced by European and American governments is connected with the distribution inequities they contributed to set up; a fair acknowledgment of the political determinants of wages negotiation constitutes a fundamental premise for an incomes policy able to get a satisfactory stability of prices level. |
| JEL: | B22 B31 |
| Date: | 2011–04 |
| URL: | http://d.repec.org/n?u=RePEc:sap:wpaper:142&r=reg |
| By: | Viscusi, W. Kip (Vanderbilt University); Zeckhauser, Richard J. (Harvard University) |
| Abstract: | The BP Deepwater Horizon oil spill highlighted the glaring weakness in the current liability and regulatory regime for oil spills and for environmental catastrophes more broadly. This article proposes a new liability structure for deep sea oil drilling and for catastrophic risks generally. It delineates a two-tier system of liability. The first tier would impose strict liability up to the firm's financial resources plus insurance coverage. The second tier would be an annual tax equal to the expected costs in the coming year beyond this damages amount. A single firm will be identified as responsible for generating the risk. It would be required to demonstrate substantial ability to pay in the first tier before being permitted to engage in the risky activity. This structure provides for efficient deterrence for environmental catastrophes, since the responsible party is bearing in expectation the risks it is imposing. It also addresses the challenges posed by the fat-tailed distributions of catastrophic environmental risks and provides for more assured and adequate compensation of potential losses than current liability and regulatory arrangements. |
| JEL: | G22 K32 Q30 Q40 |
| Date: | 2011–07 |
| URL: | http://d.repec.org/n?u=RePEc:ecl:harjfk:rwp11-025&r=reg |
| By: | David de la Croix (UNIVERSITE CATHOLIQUE DE LOUVAIN, Institut de Recherches Economiques et Sociales (IRES) and Center for Operations Research and Econometrics (CORE)); Axel Gosseries (FNRS (Belgium) and UNIVERSITE CATHOLIQUE DE LOUVAIN, Hoover Chair) |
| Abstract: | For a given technology, two ways are available to achieve low polluting emissions: reducing production per capita or reducing population size. This paper insists on the tension between the former and the latter. Controlling pollution either through Pigovian taxes or through tradable quotas schemes encourages agents to shift away from production to tax free activities such as procreation and leisure. This natalist bias will deteriorate the environment further, entailing the need to impose ever more stringent pollution rights per person. However, this will in turn gradually impoverish the successive generations: population will tend to increase further and production per capita to decrease as the generations pass. One possible solution consists in capping population too. |
| Keywords: | Overlapping generations, Environmental Policy, Endogenous Fertility, Quantity - Quality Tradeoff, Population Control |
| JEL: | Q58 Q56 J13 O41 |
| Date: | 2011–05–31 |
| URL: | http://d.repec.org/n?u=RePEc:ctl:louvir:2011020&r=reg |
| By: | Rocco Ciciretti (Faculty of Economics, University of Rome "Tor Vergata"); Simone Meraglia (Toulouse School of Economics); Gustavo Piga (Faculty of Economics, University of Rome "Tor Vergata") |
| Abstract: | We study a three-tier hierarchy Political Principal - Competition Authority - Firms in which the Principal chooses the Authority's (i) exante budget, (ii) state-contingent transfer, and (iii) preferences in presence of moral hazard. Collusion between the Authority and firms may arise so as to avoid fines. For high efficiency levels of side-contracting, collusion proofness induces high-powered incentives for the Authority. The Principal trades-off the benefits from allowing the Authority to exert its desidered level of effort with the cost of leaving it an increasing expected rent. This results in the budget being non-monotone in the side-contracting efficiency level. When firms bribe the Principal for a reduced budget, both the budget and the state-contingent transfer are non-increasing in the side-contracting efficiency level. Instances in which the Authority is optimally allocated a zero budget are characterized. Finally we show that the Principal prefers a consumers' surplus maximizing Competition Authority. |
| Keywords: | Three-tier Hierarchy, Moral Hazard, Collusion-Proofness, Endogenous Budget, Law Enforcement |
| JEL: | D72 D73 D86 K21 |
| Date: | 2011–07–14 |
| URL: | http://d.repec.org/n?u=RePEc:rtv:ceisrp:208&r=reg |
| By: | Seven Agir (Department of Economics, Yale University) |
| Abstract: | During the second half of the eighteenth century, the Ottoman policy-makers adopted a more liberal attitude towards price formation in the Ottoman grain markets. This was accompanied by the fiscal and administrative centralization of the grain trade. These seemingly contradictory policy changes could, in part, be explained in the context of conjectural changes in grain demand and supply, which rendered pre-emptive privileges and price controls less effective. The policy change, however, was not only a practical response to the strains on the pre-existing supply network but also reflected a new concern with the state of agricultural production along with the emergence of emulation as a development strategy. |
| Keywords: | Ottoman economic institutions, grain markets, liberalization |
| JEL: | B15 N33 N35 N43 N45 |
| Date: | 2011–06 |
| URL: | http://d.repec.org/n?u=RePEc:egc:wpaper:999&r=reg |
| By: | Germà Bel (Faculty of Economics, University of Barcelona); Xavier Fageda (Faculty of Economics, University of Barcelona); Melania Mur (University of Zaragoza) |
| Abstract: | This paper analyzes the cost implications of privatization and cooperation in the provision of solid waste services for a sample of small municipalities. In conducting this empirical analysis, a survey is first designed and administered to municipalities in the Spanish region of Aragon, and then an estimation of the determinants of service costs is undertaken, considering the possible endogeneity of delivery choices. Our findings indicate that cooperation is more effective than privatization in saving costs. Both production forms can enable small municipalities to cut costs by exploiting scale economies. However, the fact that inter-municipal cooperation involves lower transaction costs and is less likely to be affected by competition problems would seem to account for the fact that it is a more effective way of reducing costs. |
| Keywords: | Privatization, cooperation, costs, solid waste. JEL classification:L33, R51, H72. |
| Date: | 2011–07 |
| URL: | http://d.repec.org/n?u=RePEc:ira:wpaper:201111&r=reg |
| By: | Wladimir Andreff (CES - Centre d'économie de la Sorbonne - CNRS : UMR8174 - Université Panthéon-Sorbonne - Paris I) |
| Abstract: | Avec la mondialisation économique du sport, l'audience de l'événement sportif est soumise à incertitude et à une attractivité peu prédictible. L'une et l'autre peuvent être réduites par des régulations : régulation des ligues sportives professionnelles, régulation par changement des règles sportives, régulation financière des compétitions sportives. Le marché du travail des talents sportifs est en revanche dérégulé. |
| Keywords: | mondialisation ; régulation ; économie du sport ; événement sportif ; ligues sportives ; marché du travail |
| Date: | 2011 |
| URL: | http://d.repec.org/n?u=RePEc:hal:cesptp:halshs-00606043&r=reg |
| By: | Rode, Sanjay |
| Abstract: | The solid waste is increasing in Pune city due to growth of population, urbanization, higher per capita income and standard of living, changing lifestyle and food habits. The solid waste created by the household units, shops, restaurant and commercial units are higher. Solid waste is inevitable task in urbanization process and it will increase in future. The collection, segregation, storage, transports and processing of solid waste needs planning and more investment. Clean city improves standard of living by reducing different diseases. Public private partnership is more useful in solid waste management. Government and Municipal Corporation must encourage local management through collection, transport and segregation and disposal of solid waste. Public awareness and segregation at source, rules and regulations related to solid waste will bring good change in solid waste management. |
| Keywords: | Urbanization; management; lifestyle |
| JEL: | Q5 Q53 |
| Date: | 2010–12–28 |
| URL: | http://d.repec.org/n?u=RePEc:pra:mprapa:32137&r=reg |
| By: | Barbara Annicchiarico (Department of Economics - University of Rome “Tor Vergata”); Federica Orioli (University of Rome "Luiss Guido Carli" - University of Rome "Luiss Guido Carli"); Federico Trionfetti (GREQAM - Groupement de Recherche en Économie Quantitative d'Aix-Marseille - Université de la Méditerranée - Aix-Marseille II - Université Paul Cézanne - Aix-Marseille III - Ecole des Hautes Etudes en Sciences Sociales (EHESS) - CNRS : UMR6579) |
| Abstract: | We replace monopolistic competition with national oligopolies in a model of "new economic geography". There are many possible bifurcation diagrams but, unlike in monopolistic competition, the symmetric equilibrium is always stable for low trade costs. The antitrust policy, though identical in both countries, affects the geographical distribution of firms. In turn, migration attenuates the effectiveness of the antitrust policy in eliminating collusive behavior. For high trade costs a toughening of the antitrust policy is likely to result in more agglomeration and may reduce world welfare. The antitrust policy is more likely to be welfare improving when market integration progresses. |
| Keywords: | Spatial Oligopoly, Antitrust Policy, Welfare |
| Date: | 2011–07–10 |
| URL: | http://d.repec.org/n?u=RePEc:hal:wpaper:halshs-00607641&r=reg |