nep-reg New Economics Papers
on Regulation
Issue of 2012‒01‒25
eleven papers chosen by
Oleg Eismont
Russian Academy of Sciences

  1. Financial and Regulatory Failure: The Case of Ireland By Kenneth Patrick Vincent O'Sullivan
  2. Regulating Greenhouse Gases from Coal Power Plants under the Clean Air Act By Linn, Joshua; Mastrangelo, Erin; Burtraw, Dallas
  3. The Regulation of Hunting: A Population Tax By Jens Abildtrup; Frank Jensen
  4. Mandatory environmental disclosures by companies complying with IAS/IFRS: The case of France, Germany and the UK By Elena Barbu; Pascal Dumontier; Niculae Feleagă; Liliana Feleagă
  5. The State’s Enforcement Monopoly and the Private Protection of Property By Christoffel Grechenig; Martin Kolmar
  6. String of defaults: Spanish financial crises through the years By Shachmurove, Tomer; Shachmurove, Yochanan
  7. Financial Reform after the Crisis: An Early Assessment By Nicolas Veron
  8. Pollution control: targets and dynamics. By Giuseppe Travaglini
  9. Optimal Accomplice-Witnesses Regulation under Asymmetric Information By Salvatore Piccolo; Giovanni Immordino
  10. The broken broker system?: Transacting on agricultural wholesale markets in India (Uttarakhand) By Minten, Bart; Vandeplas, Anneleen; Swinnen, Johan F.M.
  11. Systemic oversight frameworks in LAC : current practices and reform agenda By Gutierrez, Eva; Caraballo, Patricia

  1. By: Kenneth Patrick Vincent O'Sullivan (University of Limerick)
    Abstract: The paper chronicles the evolution of financial regulation in Ireland, with particular attention given to the roles, responsibilities and actions of those authorities responsible for maintaining financial stability. It examines the role of financial regulation during the property bubble, in particular, the huge increase in propertybacked lending which fuelled its growth during the mid-2000s. We examine the impact of ongoing government support to the banking system and the damage which has been done to public finances since the banking crisis.
    Keywords: 2008 banking crisis, regulatory failure, Ireland, principles based regulation, public debt
    Date: 2011–12–22
  2. By: Linn, Joshua (Resources for the Future); Mastrangelo, Erin; Burtraw, Dallas (Resources for the Future)
    Abstract: The Clean Air Act has assumed the central role in U.S. climate policy, directing the Environmental Protection Agency to develop regulations governing the emissions of greenhouse gases from existing coal-fired power plants. The cost and environmental effectiveness of policy options depend on abatement costs, the magnitude of emissions reduction opportunities, and the sensitivity of plant utilization. This paper examines the operation of electricity-generating units over 25 years to estimate the marginal costs and potential magnitude of emissions reductions that could result from improvements in their operating efficiency. We find that a 10 percent increase in coal prices causes a 0.3 to 0.9 percent heat rate reduction, broadly consistent with engineering assessments of abatement costs and opportunities. We also find that coal prices have a significant effect on utilization, but that will vary depending on the policy design. The results are used to compare cost-effectiveness of alternative policies.
    Keywords: efficiency, regulation, greenhouse gas, carbon dioxide, coal, performance standards
    JEL: L94 Q54
    Date: 2012–01–10
  3. By: Jens Abildtrup (INRA, Laboratoire d´Economic Forestiere, Nancy, France); Frank Jensen (Institute of Food and Resource Economics, University of Copenhagen)
    Abstract: Within hunting, wildlife populations are estimated to be too high in many countries which is assumed to be due to the market failure, that each hunter harvests too little compared to what the regulator wants. This may be due to the existing regulation which, among other things, requires knowledge of the individual harvest. However, information about the individual harvest may be costly to obtain. Thus, we may have to look for alternatives to the existing system. This paper proposes a population tax/subsidy as an alternative which is the difference between the actual and optimal population multiplied by an individual, variable tax rate. The variable tax rate is, among other things, based on the difference in marginal value of the population between the hunter and the regulator. The paper shows that the population tax/subsidy secures a first-best optimum. Thus, the population tax is a good alternative to the existing regulation.
    Date: 2012–01
  4. By: Elena Barbu (CERAG - Centre d'études et de recherches appliquées à la gestion - CNRS : UMR5820 - Université Pierre Mendès-France - Grenoble II); Pascal Dumontier (CERAG - Centre d'études et de recherches appliquées à la gestion - CNRS : UMR5820 - Université Pierre Mendès-France - Grenoble II); Niculae Feleagă (The Bucharest Academy of Economic Studies - The Bucharest Academy of Economic Studies); Liliana Feleagă (The Bucharest Academy of Economic Studies - The Bucharest Academy of Economic Studies)
    Abstract: This study investigates whether the adoption of a single set of accounting standards, such as IFRS, guarantees harmonization of accounting practices within a country and across countries, or whether differences in reporting practices persist because of dissimilarities in reporting habits and institutional settings. To this end, we investigate whether the level of environmental disclosure under IFRS is related to the size of the reporting firm, which has been shown to be a major determinant of voluntary environmental information, and the strength of legal and regulatory constraints on environmental disclosures in the country where the firm is domiciled. Results indicate that environmental disclosures imposed by IFRS increase with firm size, just like voluntary environmental disclosures. This suggests that application of IFRS is affected by the reporting practices that prevailed prior to IFRS adoption. Results also indicate that firms domiciled in countries with constraining environmental disclosure regulations (i.e. France and the UK) report more on environmental issues than do firms domiciled in countries with weakly constraining regulations (i.e. Germany). This suggests that national regulations strongly impact IFRS reporting. Taken as a whole, our results support the view that IFRS are not applied consistently across firms or across countries, notably because of persistence of reporting traditions and discrepancies in national legal requirements.
    Keywords: environmental disclosure; environmental accounting;environmental regulation; IAS/IFRS
    Date: 2012–01–09
  5. By: Christoffel Grechenig (Max Planck Institute for Research on Collective Goods, Bonn); Martin Kolmar (Institute of Economics, University of St. Gallen)
    Abstract: The modern state has monopolized the legitimate use of force. This concept is twofold. First, the state is empowered with enforcement rights; second, the rights of the individuals are (partly) restricted. In a simple model of property rights with appropriation and defense activity, we show that a restriction of private enforcement is beneficial for the property owner, even if there are no economies of scale from public protection. We emphasize the role of the state as a commitment device for a certain level of enforcement. However, commitment will only work if the state can regulate private protection. A ban of private enforcement measures can even be beneficial in situations where there would be no private enforcement at first place because the “shadow” of defense has a negative impact on the investments in property rights infringements. From a legal perspective, our approach emphasizes a regulation of victim behavior as opposed to the standard approach which focuses on the regulation of criminal behavior.
    Keywords: Contests, Property Rights, Enforcement, Private Protection, Law
    JEL: K42 P14 P37 P48 N40
    Date: 2011–09
  6. By: Shachmurove, Tomer; Shachmurove, Yochanan
    Abstract: Like many countries, Spain has gone through a series of financial crises, both before and after its industrialization. There are many underlying causes for these crises, as well as for the current Spanish downturn. It is worth noting that there are similarities between recessions throughout the history of Spain. The role of government spending, government regulation, credit institutions, budget deficits, the political climate, and international trade have been important determinants of the state of the Spanish economy, as they have been in other economies across the globe.
    Keywords: Spain; Spanish Economy; Financial Crises; Federal Budget Deficit; Banking Crises; Subprime Mortgage; Spanish Industrial Revolution; Economic History; Political Economy; International Trade; Government Regulation
    JEL: N1 E0 F0 N2 E6 E44 G38 G18 N0 E5 G0 E3
    Date: 2011–07
  7. By: Nicolas Veron (Peterson Institute for International Economics)
    Abstract: This working paper aims to take stock of global efforts towards financial reform since the start of the financial crisis in 2007–08 and to provide a synthetic (if simplified) picture of their status as of January 2012. Underlying dynamics are described and analyzed both at the global level (particularly G-20, International Monetary Fund, and the Financial Stability Board) and in individual jurisdictions, as well as the impact the crisis has had on these regions. The possible next steps of financial reform are then reviewed, including: the ongoing crisis management in Europe, the new emphasis on macroprudential approaches, the challenges posed by globally integrated financial firms, the implementation of harmonized global standards, and the links between financial systems and growth.
    Keywords: banks, financial regulation, global financial crisis, global governance, international standards
    JEL: F02 G15 G28 G32 G38
    Date: 2012–01
  8. By: Giuseppe Travaglini (Department of Economics, Society & Politics, Università di Urbino "Carlo Bo")
    Abstract: In this paper I study the e¤ects of environmental regulation which establishes upper and lower binding targets to pollution emissions. Essentially, I deal with the properties of a stochastic model of pollution control in continuous-time under emission targets and uncertainty, emphasizing dynamic nonlinearities. Inside the targets pollution behaves as if it were freely floating until it hits one of the two limits. The model provides three main results. First, I show that binding targets can affect the pollution floating even when the boundaries are currently slack. Solutions of the model show that pollution becomes an S-shaped locus of the fundamentals. Second, I show that binding targets will lead to more stable pollution rate determination within the boundaries, than free floating. Finally, stabilization of pollution is related to the growth rate and volatility of fundamentals, to the sensitivity to expected changes of pollution rate and to the credibility of the authorities in defending the pollution targets.
    Keywords: Pollution targets, Optimal stochastic control, Uncertainty, Environmental policy.
    JEL: L51 H23 Q28
    Date: 2012
  9. By: Salvatore Piccolo (Università Cattolica del Sacro Cuore (Milano) and CSEF); Giovanni Immordino (Università di Salerno and CSEF)
    Abstract: We study the problem of a Legislator designing immunity for privately informed cooperating accomplices. Our objective is to highlight the positive (vertical) externality between expected returns from crime and the information rent that must be granted by the Legislator to whistleblowers in order to break their code of silence (omertà) and elicit truthful information revelation. We identify the accomplices' incentives to release distorted information and characterize the second-best policy limiting this behavior. The central finding is that this externality leads to a second-best policy that purposefully allows whistleblowers not to disclose part of their private information. We also show that accomplices must fulfill minimal information requirements to be admitted into the program (rationing), that a bonus must be awarded to accomplices providing more reliable information and that, under some conditions, rewarding a self-reporting `boss' can increase efficiency. These results are consistent with a number of widespread legislative provisions.
    Keywords: Accomplice-witnesses, Adverse Selection, Leniency, Organized Crime
    Date: 2012–01–11
  10. By: Minten, Bart; Vandeplas, Anneleen; Swinnen, Johan F.M.
    Abstract: There is a vigorous debate on liberalization of the heavily regulated agricultural markets in India. A crucial institutional characteristic is the role of state-regulated brokers in wholesale markets. Relying on data from a unique survey in Uttarakhand, a state in North India, we find that regulations on margins are ineffective, since most brokers charge rates that significantly exceed the regulated ones. We also find that a majority of farmers self-select into long-term relationships with brokers. These relationships allow some of the farmers to interlink credit and insurance markets to the agricultural output market. This interlinkage does not, however, appear to be an instrument for farmer exploitation (since it does not lead to worse inputs, higher interest rates, or lower implicit output prices) but is seemingly an extra service provided by brokers to establish farmer loyalty and thereby ensure future supplies.
    Keywords: Agricultural marketing, brokers, interlinkages,
    Date: 2011
  11. By: Gutierrez, Eva; Caraballo, Patricia
    Abstract: The world financial crisis that started in the US housing market in 2008 brought into evidence deep failures of prudential oversight, linked for the most part to a failure to comprehend and handle systemic risk in a way that could prevent systemic crises. This paper summarizes the responses to the joint World Bank -ASBA survey o the state of systemic oversight in the Latin American and Caribbean financial sectors and reflects on some of the challenges identified by respondents. We found that there is broad consensus among regional financial authorities on the need to enhance the current systemic oversight framework. Improving consolidated supervision to mitigate risk-shifting in conglomerates, adjusting prudential regulations to account for the accumulation of systemic risks, redefining the role of the supervisor to make it more proactive, and improving coordination among local supervisors as well as with foreign supervisors figure preeminently in the regional reform agenda.
    Keywords: Banks&Banking Reform,Debt Markets,Emerging Markets,Access to Finance,Currencies and Exchange Rates
    Date: 2012–01–01

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