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High-profile revelations of organizational malpractices in the last few years such as unethical business deals based on large-scale conflicts of interest, insider trading, overvaluation of housing mortgages, doctored inventories of inadequate capital holdings to raise finances, and manipulation of facts and figures have made transparency an important value in today’s organizational world. Stakeholders, whether internal or external, expect to have access to information and organizations have little choice but to open up in keeping with current trends (Christensen, 2002; Christensen & Langer, 2009). This paper offers a tentative examination of what we believe to be an original conceptual framework for a critical understanding of processes of and motivations for organizational transparency, including its paradoxes, by drawing on and combining theories of power, hegemony, legitimacy, and liquid modernity.

This study investigates how commercial paper rates respond to the innovations in stock market risk premiums. The unrestricted vector autoregression (VAR) analysis of monthly data from 1997:1 to 2012:M6 shows that the changes in the one-, two-, and three-month non-financial and financial commercial paper rates positively respond to the innovations in the excess returns on the CRSP value weighted index. The response is especially strong during the first few months following shocks to stock market risk premiums. The Granger-causality test results show the changes in commercial paper rates can be predicted by the excess returns on the CRSP value weighted index. The findings from this study provide evidence that there is a link between equity market and commercial paper market.

A meta analysis of key performance indicators (KPI) for a wide range of companies across the paper industry value chain was performed to understand whether disclosure- or performance-based sustainability metrics were better indicators for financial performance of the firms. The study aimed to contribute to theory development on the link between sustainability and competitiveness of the firm, by conducting a multivariate statistical analysis of a wide range of financial and sustainability metrics. Correlation matrices and principal component analysis (PCA) indicated: (i) a slight positive correlation between GHG emissions and disclosure score (e.g. ESG), (ii) a negative correlation between GHG emissions and financial performance (e.g. ROA, stock price, valuation), and (iii) disclosure based measures are better predictors or corporate sustainability performance (CSP) than are performance-based metrics. Targeted correlation analysis using three principal component indicator variables from four models were inconclusive as to links between sustainability and financial indicators. Even though companies clustered along the ESG score spectrum, there was no relationship with financial metrics. Then performance-based CSP scores were used, no clustering was observed. The lack of validation of the results from the meta analysis using the targeted KPIs was likely due to the loss of resolution of environmental sustainability data in the ESG or CSP scores, which mask trends as the result of decreased sensitivity. Future work should focus on preserving higher granularity of metrics and increased use of multivariate statistical tools to increase the ‘signal-to-noise ratio’ for sustainability-financial performance trends.

The government set the target for redistribution of land to 30% by 2014. They have adopted the “willing-buyer-willing-seller” model that relies on a voluntary transaction between farmers and government to acquire such land. Frustrated at the slow pace of land reform, the ruling party is starting to indicate that the state will in the future rely on its expropriation powers to acquire such land. Section 25 of the Constitution makes it clear that when the state expropriates property, that compensation must be paid. The current act, the 1975 Expropriation Act, determines that such compensation must be market value, while the Constitution lists market value is listed as only one of at least five factors that must be taken into account when determining compensation. There have been various attempts at drafting legislation that will bring compensation practices in line with the Constitution, with the latest Bill published in March 2013. This article focusses on the Green Paper that preceded the Bill, and argues that not much direction is given on how compensation for expropriation should be calculated.

Hosting mega-events has long been regarded as an opportunity for economic growth, creating long-lasting benefits and attaining international recognition. Recently, both the scientific community and the public opinion at large have turned much more skeptical about the impact of mega-events. Why is it that some events appear successful and other disasters? Why the perception of impacts has changed over time? To answer these (and other) questions, there is a need to go beyond the simple narratives and “stylized facts”, to undertake some serious scientific investigation, based on verifiable data and testable models. Despite the fact that most recent studies use the same modeling tool, namely some Computable General Equilibrium (CGE) model, results are sometimes contradictory, thereby hindering the trustiness of the economic analysis for policy guidance. In this paper, we show that results are different because assumptions are different and because the range of effects considered is different, even when the same model is employed. Furthermore, some critical hypotheses are not often clearly stated. We advocate some kind of standardization in the process of model building for the economic assessment of mega-events. Only a transparent and replicable model exercise can serve as a “litmus paper”, to ascertain whether hosting a mega-event is good or bad for an economy.

This paper articulates three insights regarding asset prices and monetary policy: (1) Asset price appreciation due to monetary expansion, despite its “paper” wealth nature, tends to make current consumers as a whole wealthier; (2) the wealth effect of monetary policy (on consumption) is negatively correlated with Tobin’s q effect (on investment), which positively depends on investment elasticity; and (3) the soundness of asset market performances does not depend on whether they are fundamental or not, but on their compatibility with the AD-AS balance in the long run. These basic insights and their implications reveal some limitations of monetary policy as a stabilization policy, clarify some misperceptions on fundamental asset prices, and provide a rationale for monetary policy to react directly to asset market performances.

The effects of price and market size variables on the investment propensities in the pulp and paper industry are analyzed. A panel of 15 European countries for the time period 1984 - 1997 is used in the regression analysis. We find that the wages, the $US/ECU$ exchange rate, the price of paper and the installed production capacity are the main determinants of strategic investments in this industry. There are no - or only very small - effects from our measures of market size.

Tax revenues are forecast to increase from 23.5% of GDP in 2015-16 to 25.1% of GDP by 2019-20. Expenditures are expected to fall from 25.8% to 25.2% of GDP over the same period. Over the four year period the government's nominal tax receipts are forecast to increase by 30%. Tax receipts will amount to $500 billion by 2019-20. Whilst much of the increase is predicated on growth new tax measures will also need to contribute, and in a big way. The government plans to collect an additional $28 billion each year!

Understanding how prior outcomes affect risk attitudes is critical for the study of choice under uncertainty. A large literature documents the influence of prior losses on subsequent risk attitudes. The findings appear contradictory: some studies find that people become more risk seeking after a loss, whereas others assert the opposite -- that they become more risk averse. In this paper, we show that these seemingly inconsistent findings can be explained by individuals' differential responses to realized versus paper losses. Following a realized loss, individuals avoid risk; if the loss has not been realized -- a paper loss -- individuals are more likely to chase their losses and take on even greater risk. We provide support for our framework using existing data and across two experiments. We also show that giving individuals flexibility in choosing when to realize losses can lead to lower earnings in environments where loss-chasing decreases expected returns. Drawing a distinction between paper and realized losses reconciles prior findings, and has important implications for contract design and optimal monitoring.

China is frequently singled out for defying international law and disregarding international institutions. This paper examines one key stratum of China’s compliance: its implementation of World Trade Organization rulings. China shows a strong record of compliance, and has reformed its domestic legal system to accommodate the WTO. Ultimately, however, I argue these efforts amount to paper compliance. The mere phenomenon of legislative change does not guarantee compliance. First, China has not fully implemented several rulings, leaving in place many inconsistent regulations. Second, China’s political and legal systems permit various manners of non-compliance. Paper compliance captures the contradictions between stated behavior and demonstrated conduct, and shows that regulatory revision, even if impressive on paper, imperfectly reflects the broader context of compliance.

Between 1797 and 1821, Britain suspended the gold standard in order to finance the Napoleonic Wars. This measure was accompanied by large scale debt accumulation and inflation: After Napoleon’s final defeat at Waterloo in 1815, the debt to GDP ratio had climbed to 226%; the price level exceeded its 1797 level by 22.3%. Under these circumstances and given that institutional settings allowed excluding the possibility of strategic default, I will show that expectations of how debt would be stabilized in the future shaped the observed evolution of the price level. Thus, my contribution establishes the importance of fiscal determinants of the price level.

This article explores the determinants of price level fluctuations in Britain during the first suspension of the gold standard over the 1797-1821 period. I find that the contemporary price level was determined by world gold prices and expectations regarding the resumption of the gold standard at the pre-war parity. As the latter hinged on market participants’ expectations concerning the financial burden of the Napoleonic Wars, my contribution establishes the importance of fiscal factors for the determination of the price level.

This paper revisits the D-S (Dixit-Stiglitz) model. It’s a simple general monopolistic model with n monopolistic goods, and a numeraire good Labour ( w=1); aggregation for all goods in the economy. We have considered in our paper constant elasticity of substitution case(CES).On the supply side, the assumption is that the labour is perfectly mobile factor of production across the sectors, so as a result in our model there is single wage rate which we denote as in the other sectors than monopolistic there is constant returns to scale and we can specify the production function: The Dixit-Stiglitz model of monopolistic competition works only when n is large; from the functions of the productions best when one applies linear production function. Under increasing returns to scale monopolistic competition will lead to a greater degree of product differentiation than it is socially optimal.

The twentieth century is commonly acknowledged as the "age of migration". During the last 100 years population movements have intensified and, more importantly, their structure changed significantly. In terms of the geographical distribution of immigrants the European Union and traditional immigration countries became the most important target regions. In these countries immigration is commonly presented as a threat to host economies and societies. Along with this the fiscal impact of immigration are ones of the most controversial topics in recent debates on migration. Against this background this paper aims at discussing and synthesizing both theoretical and empirical literature on the fiscal impact of immigration. We hypothesize that the fiscal impacts of immigration are complex and dynamic and thus a proper assessment demands a careful empirical strategy. There is no clear or coherent theoretical framework to explain the fiscal effects of migration. The outcomes of empirical studies are mixed and they are not unequivocal. Notwithstanding, they show that, generally speaking, the fiscal impact of immigration is small. Moreover, there is no clear impact of skill level on the fiscal position of foreigners. What really matters is, instead, the type of migration, labor market incorporation (absorption) and the institutional framework at destination (the structure of the welfare state). In terms of empirical strategies we would recommend dynamic approaches, which account for the effects resulting from demographic aging.

This paper assesses Revolutionary and Napoleonic wartime economic policy. Suspension of gold convertibility in 1797 allowed the Bank of England to nurture British monetary orthodoxy. The Order of the Privy Council suspended gold payments on Bank of England notes and afforded simultaneous protection to the government and the Bank in pursuit of the conflicting goals of price stability and war finance. The government, the Bank of England and the commercial banks formed a loose alliance drawing on due political and legal processes and also paid close attention to public opinion. We suggest that the ongoing solvency of the Bank of England was facilitated by suspension and allowed the Bank to continue to make substantial profits throughout the Wars. It became acceptable for merchants to continue to trade with non-convertible Bank of England notes and for the government to finance the war effort, even with significant recourse to unfunded debt. These aspects combined to create a suspension of convertibility that did not undermine the currency. By contrast, the Assignats debacle had cost the French monetary system its reputation in the last decade of the 18th century and so Napoleonic finance had to evolve within a more rigid and limiting framework.

This paper presents Leon Walras and Augustin Cournot views on monetary regulation. Important differences can be found in their views about the convenience of the issuing of paper money and fiat money in general. Whereas Walras is against bank notes, even if coming from a central bank, Cournot has a moderate position. He accepts the need for bank notes even without a strict adjustment to metal reserves. It can be ascertained that Cournot believes discretionary monetary regulation is convenient and acceptable, while Walras believes the only acceptable monetary system is one based exclusively on the stability of the value of money under a monetary rule following the strict equivalence between metallic reserves and a pure medium of exchange form of money. This paper shows Cournot’s ability to understand more clearly than Walras the evolution of the monetary system of his days. Whereas Walras is trying to guarantee the coherence of his pure theory with his applied theory, and he is then unable to accept the evolution toward a monetary system based on fiat money and he proposes very rigid and complex system of quasi-bimetallic circulation where banks are simple mediators between entrepreneurs and savings.

The relative performance of Malaysian REITs and Property Developers are compared with non parametric tests and then re-compared with risk adjusted returns a la Modigliani Modigliani. The period covered is 2006-2007 from share and unit prices from the Kuala Lumpur Stock Market. The results may not fully satisfy our financial rectitude but, at least, they may satisfy our yearning for economic morality: apparently ‘Turning dust into paper pays more than simply turning brick into paper’.

In this article, I survey the state of the mortgage loan transfer system, the legal rules that govern it, and the widening gap between those rules and the practices in the secondary mortgage market just prior to the 2008 crisis. The review includes some empirical assessment of the extent of errors and execution problems; the damage done by “robo-signing;” the Mortgage Electronic Registration System (MERS) and note delivery practices; and the extent to which courts will prevent or reverse foreclosure sales based on those errors and problems. I then examine why existing legal structures, for both paper-based and electronic transfers, are not working, and the extent to which they have failed, I also identify the key consumer and investor protection values and interests (finality, transparency, fraud protection, and so forth) that must be addressed by the law governing secondary market transfers of home loans. I conclude by outlining options for reforming the mortgage loan transfer system, including the use of a single document merging the note and mortgage, and a structure for the registration of a single authoritative electronic version of the mortgage/note and of all changes in parties to, and terms of, the transaction.

This paper investigates Samuelson's [Samuelson, P. A. “Where Ricardo and Mill Rebut and Confirm Arguments of Mainstream Economists Supporting Globalization.” Journal of Economic Perspectives, 18(3), 2004, 135–46] argument that technical progress of the trade partner may hurt the home country. We illustrate this prospect in a simple Ricardian model for situations with outward knowledge spillovers. Within this framework Samuelson's Act II effects may occur. Based on industry level panel data for 17 OECD countries for the period 1973–2000 we show econometrically that the outflow of domestic knowledge via exports or foreign direct investment (FDI) to the rest of the world may have a negative impact on industry output in the home country. This is particularly so when exporting to technologically less advanced countries and, more specifically, China.

Economists have long recognized that the time costs of using different forms of money can be significant and potentially affect the type of media of exchange used. But although there is theoretical research and anecdotal evidence that suggest time is an important element in determining the use of media of exchange, there is little empirical work documenting the magnitude of this effect. To fill this gap, this paper uses scanner data from grocery store transactions to examine time costs associated with media of exchange. Scanner data is an ideal medium for examining time costs associated with media of exchange, as these data represent actual market exchanges, grocery store retailers spend much time and effort in minimizing the length of time for checkout transactions, and everyone goes grocery shopping - this type of exchange is arguably one of the more frequent that a typical consumer makes. Using check and debit card transactions only to control for the effects of availability of different payment instruments, census tract information to proxy for demographic characteristics, and econometric procedures to control for the endogeneity of the choice of payment instrument and the realized length of time of the transaction, the results indicate that check transactions are, on average, predicted to be approximately 40 seconds longer than debit card transactions. Interestingly, the results suggest that debit card users are, on an absolute basis, more time sensitive than check users, and in particular, these sensitivities vary by the demographics of the local market. Overall, the results in this paper support the theoretical literature on media of exchange and the empirical literature using survey data.

This paper argues that banks have a unique ability to hedge against market-wide liquidity shocks. Deposit inflows provide a natural hedge for loan demand shocks that follow declines in market liquidity. Consequently, one dimension of bank "specialness" is that banks can insure firms against systematic declines in market liquidity at lower cost than other financial institutions. We provide supporting empirical evidence from the commercial paper (CP) market. When market liquidity dries up and CP spreads increase, banks experience funding inflows. These allow banks to meet increased loan demand from borrowers drawing funds from pre-existing commercial paper backup lines, without running down their holdings of liquid assets. Moreover, the supply of cheap funds is sufficiently large so that pricing on new lines of credit actually falls as market spreads widen.

When UCC Article 9 was revised in 1998, a new provision governing “electronic chattel paper” (ECP) was added. “Chattel paper” is widely used in certain industries to finance the purchase of equipment, and includes loans and leases. Under former Article 9, chattel paper financers who took possession of the chattel paper could gain priority over other secured lenders who ear-lier perfected by filing, and equipment financers sought assurances they could retain this su-per-priority status if they switched from paper to electronic records. The concept of perfection by “control” of financial assets held in electronic form had been established with the revisions of UCC Article 8 in 1994, but a new model for control of electronic chattel paper was deemed necessary because chattel paper market institutions differed significantly from market institutions covered by the revised Article 8 provisions. Revised Article 9 provides that ECP must consist of a single authoritative copy of the chattel paper record or records which is unique, identifiable, and generally unalterable. This represents a significant innovation in commercial law because it updates the concept of rights embodied in the representation of financial assets, rather than accommodating the growth of account-based systems of tracking ownership of financial assets.

The G8 is considering committing to purchase vaccines against diseases concentrated in low-income countries (if and when desirable vaccines are developed) as a way to spur research and development on vaccines for these diseases. Under such an "advance market commitment," one or more sponsors would commit to a minimum price to be paid per person immunized for an eligible product, up to a certain number of individuals immunized. For additional purchases, the price would eventually drop to close to marginal cost. If no suitable product were developed, no payments would be made. We estimate the offer size which would make revenues similar to the revenues realized from investments in typical existing commercial pharmaceutical products, as well as the degree to which various model contracts and assumptions would affect the cost-effectiveness of such a commitment. We make adjustments for lower marketing costs under an advance market commitment and the risk that a developer may have to share the market with subsequent developers. We also show how this second risk could be reduced, and money saved, by introducing a superiority clause to a commitment. Under conservative assumptions, we document that a commitment comparable in value to sales earned by the average of a sample of recently launched commercial products (adjusted for lower marketing costs) would be a highly cost-effective way to address HIV/AIDS, malaria, and tuberculosis. Sensitivity analyses suggest most characteristics of a hypothetical vaccine would have little effect on the cost-effectiveness, but that the duration of protection conferred by a vaccine strongly affects potential cost-effectiveness. Readers can conduct their own sensitivity analyses employing a web-based spreadsheet tool.

This paper investigates the effects of automation and offshoring on the dynamics of the occupational distribution of employment with a focus on Western Europe between 2000 and 2016. I use a general equilibrium model with three regions, three types of workers, ICT capital, trade in final goods and endogenous offshoring. Fed with exogenous measures of ICT-capital prices and trade costs, the model replicates key features of the data. It matches the observed dynamics of offshoring to Eastern Europe and Asian countries. It also reproduces accurately the observed polarization of the labor market: abstract and manual labor increase while routine labor falls. A counterfactual experiment reveals that automation is the main driver of polarization. Since it is also the only factor that drives individuals to become abstract (highskill) workers, it is welfare enhancing. The effects of falling trade costs on labor polarization are smaller, but imply welfare gains.

Using a large panel for 95 countries and the 1972–2014 period, this paper analyses the interactions among globalization, political & civil rights and economic convergence, through a simultaneous estimation technique. We use a multi-dimensional, de facto, and continuous measures of Freedoms and Globalization. We find a two-way positive relationship between civil liberties & political rights and economic, political and social Globalization, as well as significant two-way relationships with the economic convergence (using as a proxy the ratio of GDP per capita to the US). In this way, we extend the test for the two-way relationship between Democracy and Globalization put forward by Eichengreen and Leblang (Econ Politics 20(3):289–334, 2008). Overall, we also find a virtuous cycle between Globalization, Freedoms and Economic convergence, except for non-OECD countries at early intermediate stages of development. This positive systemic effect can be put into question by the recent negative shocks on Globalization and Freedoms related to the Covid-19 pandemic.

This paper estimates the potential distributional consequences of the first phase of the COVID-19 lockdowns on poverty and labour income inequality in 20 Latin American and Caribbean (LAC) countries. We estimate the share of individuals that are potentially able to remain active under the lockdown by taking into account individuals’ teleworking capacity but also whether their occupation is affected by legal workplace closures or mobility restrictions. Furthermore, we compare the shares under the formal (de jure) lockdown policies assuming perfect compliance with the shares under de facto lockdowns where there is some degree of non-compliance. We then estimate individuals’ potential labour income losses and examine changes in poverty and labour income inequality. We find an increase in poverty and labour income inequality in most of the LAC countries due to social distancing; however, the observed changes are lower under de facto lockdowns, revealing the potential role of non-compliance as a coping strategy during the lockdowns. Social distancing measures have led to an increase in inequality both between and within countries. Lastly, we show that most of the dispersion in the labour income loss across countries is explained by the sectoral/occupational employment structure of the economies.

We consider a broad class of intertemporal economic problems and characterize the short-run and long-run responses of the demand for a good to a permanent increase in its market price. Depending on the interplay between self-productivity and time discounting, we show that dynamic substitution effects can generate price elasticities of opposite signs in the short run and in the long run. (JEL D11, D15, H20, J22, J24)

This chapter focuses on the inner rationale and consequences of four different archetypal positions regarding how ethical and political values are tackled in welfare economics. Welfare economics is standardly associated with the welfarist framework, for which social welfare is based on individual utility only. Beyond this, we distinguish the value-neutrality claim – for which ethical values should be and are out of the scope of welfare economics –, the value confinement ideal – for which ethical values are acceptable if they are minimal and consensual–, the transparency requirement – for which any ethical values may be acceptable in the welfare economics framework if explicit and formalized –, and the entanglement claim – which challenges the very possibility of demarcation between facts and values.

This paper develops a theoretical model as a foundation of empirical analysis of the transmission channel of non-performing loans (NPLs) on bank cost of capital, credit and liquidity creation in the Eurozone. Empirical results confirm the model’s predictions and suggest that holding non-performing loans increases the cost of capital for banks in the short-term and the long-term. Moreover, the increased cost of capital reduces credit and liquidity creation, and the more so the less capitalized is the bank. This phenomenon is found to be economically more significant for European periphery country banks than for core country banks. The identification of the transmission channel is robust to the Granger predictability test.

This short paper explains the reasons and modalities of equalisation levies in the context of the digitalisation of the economy, and examines whether they would be covered by OECD-patterned tax treaties.

In light of the COVID-19 pandemic, we scrutinize what has been established in the literature on whether entrepreneurship can cause and resolve extreme events, the immediate and long-run impacts of extreme events on entrepreneurship, and whether extreme events can positively impact (some) entrepreneurship and innovation. Based on this, we utilize a partial equilibrium model to provide several conjectures on the impact of COVID-19 on entrepreneurship, and to derive policy recommendations for recovery. We illustrate that while entrepreneurship recovery will benefit from measures such as direct subsidies for start-ups, firms’ revenue losses, and loan liabilities, it will also benefit from aggregate demand-side support and income redistribution measures, as well as from measures that facilitate the innovation-response to the Keynesian supply-shock caused by the pandemic, such as access to online retail and well-functioning global transportation and logistics.

While a considerable number of employees across the globe are being forced to work from home due to the COVID-19 crisis, it is a guessing game as to how they are experiencing this current surge in telework. Therefore, we examined employee perceptions of telework on various life and career aspects, distinguishing between typical and extended telework during the COVID-19 crisis. To this end, we conducted a state-of-the-art web survey among Flemish employees. Notwithstanding this exceptional time of sudden, obligatory and high-intensity telework, our respondents mainly attribute positive characteristics to telework, such as increased efficiency and a lower risk of burnout. The results also suggest that the overwhelming majority of the surveyed employees believe that telework (85%) and digital conferencing (81%) are here to stay. In contrast, some fear that telework diminishes their promotion opportunities and weakens ties with their colleagues and employer.

Studies about innovation find evidence of a positive relationship between technological advancement and firm performance, in particular when the innovative effort is continuous. This paper aims to further the analysis on the duration of R&D investment at the firm level. The contribution of this study is threefold: first, we extend M'a~nez et al. [2014], Triguero et al. [2014] analysis for Spain to the Italian case: we use a panel of manufacturing and service companies, thus enlarging the view of R&D duration within the European countries. Secondly, from a methodological point of view, we employ both discrete- and continuous-time duration models, in order to test the Proportional Hazards (PH) assumption, i.e. the assumption that the hazard rate is equivalent over time across groups. Last, but not least, we assess whether a firm?s likelihood of continuing investment in R&D depends on the market power of companies. We test alternative measures for market power: the classical price-cost margin and a new proxy for the firm demand elasticity, obtained from a specific survey question. Results are in line with the hypothesis that R&D presents considerable temporal spill overs and strong persistence, even once unobserved heterogeneity is controlled for. Also, we argue that the appropriate proxy for market power is the firm demand elasticity, and we find support for the Schumpeterian hypothesis.

Random utility models are widely used to estimate preference parameters. In the case of intertemporal choice, the two most common models are the discounted logit and one we call the discounted Luce. Due to their apparent similarity, the choice to use one model or the other seems irrelevant. In this paper, we argue that the discounted Luce is superior to the discounted logit in two significant aspects. First, in relevant applications, the discounted Luce is monotone in the sense of Apesteguia and Ballester (2018), while the discounted logit is not. Second, we show that the discounted logit is incompatible with a property of choice probabilities we call “weak stationarity”. The latter is compatible with common assumptions on the random nature of choices and is often not falsifiable with commonly available data. Fitting a logit model to weakly stationary choice probabilities biases the time-preference estimates. On the contrary, the discounted Luce can be safely used when choice probabilities are weakly stationary. An application to an existing dataset supports the theoretical results.

This short paper provides an overview of the claims made in the emerging scholarship on artificial intelligence and antitrust policy. It discusses in particular the conjecture that markets will be rife with algorithmic collusion and extractive personalized pricing. It stresses the main methodological, theoretical and empirical limitations that underpin the claims made in the scholarship, and concludes with a call for evidenced-based antitrust policy.

As the Restatement of the Law, Liability Insurance (“the Restatement”) has progressed through the rigorous drafting process of the American Law Institute (the “ALI”), insurance industry organizations have funded several public critiques of the Restatement. In this essay, we address one of the critiques funded by the National Association of Mutual Insurance Companies: a white paper prepared by Eric Dinallo and Keith Slattery (“D&S”) that criticizes the Restatement based on “regulatory considerations.” Their overarching claim is that the Restatement adopts a series of rules that are not based on the existing case law and that, if adopted by the ALI, would greatly expand the coverage owed by property-casualty insurers and encroach on the regulatory function of state insurance regulators. The result, they argue, will be a disruption in insurance markets, including premium increases, coverage withdrawals, significant additions to loss reserves, and general market instability. As we will demonstrate, these assertions are false, unsupported by any proffered evidence, or confused and misleading. Every rule of insurance law adopted in the Restatement is grounded in existing case law; most of the rules have been adopted in most jurisdictions; and all the rules, as well as all the commentary supporting those rules, are the product of the famously thorough ALI Restatement process, which includes many opportunities for experts in the field to review, comment on, and suggest revisions to drafts. Moreover, none of the rules adopted in the Restatement encroach or usurp the role of state insurance regulators. To the contrary, as demonstrated by the fact that all the rules the Restatement adopts are already in effect in multiple jurisdictions, those rules are compatible with, and complementary to, the regulatory role of state offices of insurance regulation. Further, D&S do not offer any evidence in support of their claim regarding adverse effects on the insurance market. All they offer is their own opinions, which are grounded in the mischaracterizations and confused analysis that we describe.

Do claims on the private sector serve the role of safe assets? We answer this question using high-frequency panel data on prices and quantities of certificates of deposit (CD) and commercial paper (CP) issued in Europe. We show that only very short-term private securities benefit from a premium for safety. Using several identification strategies, we show that the issuance of short-term CDs, but not of CPs, strongly responds to measures of safety demand. The private production of safe assets is stronger for issuers with high credit worthiness, and breaks down during episodes of market stress. We conclude that even very short-term private assets are sensitive to changes in the information environment and should not be treated as equally safe at all times.

This paper shows that illiquidity in short-term credit markets during the financial crisis may have sharply curtailed the supply of non-bank consumer credit. Using a new data set linking every car sold in the United States to the credit supplier involved in each transaction, we show that the collapse of the asset-backed commercial paper market decimated the financing capacity of captive leasing companies in the automobile industry. As a result, car sales in counties that traditionally depended on captive-leasing companies declined sharply. Although other lenders increased their supply of credit, the net aggregate effect of illiquidity on car sales is large and negative. We conclude that the decline in auto sales during the financial crisis was caused in part by a credit supply shock driven by the illiquidity of the most important providers of consumer finance in the auto loan market: the captive leasing arms of auto manufacturing companies. These results also imply that interventions aimed at arresting illiquidity in credit markets and supporting the automobile industry might have helped to contain the real effects of the crisis.

The need of fiscal consolidation is likely to dominate the policy agenda in the next decade; starting from statistical evidence on the conduct of fiscal policy in the EMU area over the last decade, this paper addresses the optimality of alternative fiscal consolidation strategies. We explore the welfare properties. In this paper we explore the welfare properties of debt-targeting fiscal policy implemented through, alternatively, distortionary taxation on consumption, labour and capital income or productive and wasteful government expenditure. We build a general equilibrium model with various distortions in order to evaluate the welfare ranking of alternative fiscal policy configurations under different monetary policy regimes. Our results show the welfare superiority of fiscal adjustments based on productive government expenditure, whereas the use of a capital income tax rate as fiscal instruments yields the highest welfare loss.

This paper examines the relationship between money market fund (MMF) risks and outcomes during crises, with a focus on the ABCP crisis in 2007 and the run on money funds in 2008. I analyze three broad types of MMF risks: portfolio risks arising from a fund's assets, investor risk reflecting the likelihood that a fund's shareholders will redeem shares disruptively, and sponsor risk due to uncertainty about MMF sponsors' support for distressed funds. I find that during the run on MMFs in September and October 2008, outflows were larger for MMFs that had previously exhibited greater degrees of all three types of risk. In contrast, as the asset-backed commercial paper (ABCP) crisis unfolded in 2007, many MMFs suffered capital losses, but investor flows were relatively unresponsive to risks, probably because investors correctly believed that sponsors would absorb the losses. However, the consequences of MMF risks were quite costly for some sponsors: Using a unique data set of sponsor interventions, I show that sponsor financial support was more likely for MMFs that previously earned higher gross yields (a measure of portfolio risk) and funds with bank-affiliated sponsors. Funds' gross yields and bank affiliation (but not funds' ratings) also would have helped forecast holdings of distressed ABCP. This paper provides some useful lessons for investors and policymakers. The significance of MMF risks in predicting poor outcomes in past crises highlights the importance of monitoring such risks, and I offer some useful proxies for doing so. The paper also argues for greater attention to the systemic risks posed by the industry's reliance on discretionary sponsor support.

This paper presents an exploratory agent-based model of a real time gross settlement (RTGS) payment system. Banks are represented as agents who exchange payment requests, which are settled according to a set of simple rules. The model features the main elements of a real-life system, including a central bank acting as liquidity provider, and a simplified money market. A simulation exercise using synthetic data of BI-REL (the Italian RTGS) predicts the macroscopic impact of a disruptive event on the flow of interbank payments. The main advantage of agent-based modeling is that we can dynamically see what happens to the major variables involved. In our reduced-scale system, three hypothetical distinct phases emerge after the disruptive event: 1) a liquidity sink effect is generated and the participants' liquidity expectations turn out to be excessive; 2) an illusory thickening of the money market follows, along with increased payment delays; and, finally 3) defaulted obligations dramatically rise. The banks cannot staunch the losses accruing on defaults, even after they become fully aware of the critical event, and a scenario emerges in which it might be necessary for the central bank to step in as liquidity provider. The methodology presented differs from traditional payment systems simulations featuring deterministic streams of payments dealt with in a centralized manner with static behavior on the part of banks. The paper is within a recent stream of empirical research that attempts to model RTGS with agent-based techniques.

Central banks are increasingly communicating their economic outlook in an effort to manage the public and financial market participants’ expectations. We provide original causal evidence that the information communicated and the assumptions underlying a central bank’s projection can matter for expectation formation and aggregate stability. Using a between-subject design, we systematically vary the central bank’s projected forecasts in an experimental macroeconomy where subjects are incentivized to forecast the output gap and inflation. Without projections, subjects exhibit a wide range of heuristics, with the modal heuristic involving a significant backward-looking component. Ex-Ante Rational dual projections of the output gap and inflation significantly reduce the number of subjects’ using backward-looking heuristics and nudge expectations in the direction of the rational expectations equilibrium. Ex-Ante Rational interest rate projections are cognitively challenging to employ and have limited effects on the distribution of heuristics. Adaptive dual projections generate unintended inflation volatility by inducing boundedly-rational forecasters to employ the projection and model-consistent forecasters to utilize the projection as a proxy for aggregate expectations. All projections reduce output gap disagreement but increase inflation disagreement. Central bank credibility is significantly diminished when the central bank makes larger forecast errors when communicating a relatively more complex projection. Our findings suggest that inflation-targeting central banks should strategically ignore agents’ irrationalities when constructing their projections and communicate easy-to-process information. Electronic supplementary material The online version of this article (10.1007/s10683-020-09684-6) contains supplementary material, which is available to authorized users.

Can the potential availability of unemployment insurance (UI) affect the behavior of employed workers and the duration of their employment spells? I apply a regression kink design (RKD) to address this question using linked employer-employee data from the Brazilian labor market. Exploiting the UI schedule, I find 1% higher potential benefit level increases job duration by around 0.3%. Such result is driven by the fact that higher UI decreases the probability of job quits, which are not covered by UI in Brazil. These estimates are robust to permutation tests and a number of falsification tests. I develop a simple model to assess the economic relevance of this finding. It shows that the positive effect on employment duration implies that the optimal benefit level is higher than otherwise. More importantly, the model delivers a simple welfare formula based on sufficient statistics which can be easily linked to the data. A simple calibration exercise shows that this elasticity impacts welfare with a similar magnitude to the well-known elasticity of unemployment duration to benefit level.

Within a simple model of homogeneous oligopoly, we show that the traditional ranking between Bertrand and Cournot equilibria may be reversed. For price setting entails a continuum of price equilibria under convex variable costs, departure from marginal cost pricing may be observed. As a consequence, Bertrand-Nash equilibrium profi ts (welfare) may be higher (lower) than Cournot-Nash ones. The reversal of the standard rankings occurs when pricing strategies mimic collusive behaviour.

The institutional environment of Portuguese banking during the Golden Age years of economic growth (1950-1973) has been criticized in many instances, at the time and in recent literature. Direct observers of the period as well as historians have stressed two main aspects of that environment: on the one hand, it would have granted excessive protection to existing banks, allowing them to obtain high rents, a disincentive for them to compete and innovate; on the other, it would have forced banks to concentrate their activity excessively on short-term commercial paper, thus preventing them from contributing effectively to finance growth.Such supposed features of the banking system seem to be in contradiction, however, with the high growth rates of the years 1950 to 1973, the best in terms of economic growth in all of Portugal’s history. The apparent contradiction is not limited to Portugal, in fact, as rapid growth in many economies in that period occurred within a framework of heavily regulated financial systems. This is the “financial paradox” of the Golden Age. It is difficult to reconcile the idea that a relatively free and competitive financial system is essential to finance investment at efficient prices with the fast growth seen during the Golden Age.As we show in this paper, Portugal is an interesting case in the international perspective. As in the rest of the western world, legislation repressed banking activity quite tightly, but at the same time left a series of loopholes open, which banks used in order to circumvent its restraints and compete with each other. The signs of competition were various. We present them in this work in an essentially descriptive way. We make a case that competition resides at the origin of the modernization of Portuguese banking, mostly in two dimensions: the growth of time deposits and geographical expansion. In order to compare with other western countries, we provide some international benchmarks, which show that Portuguese banks did not stand as outliers in comparison with their counterparts in other countries.

In this paper we compare two policy instruments that can be adopted to curb carbon emissions. The first is a conventional pollution tax. The second is an environmental campaign aiming to influence consumers to switch to a green good. We consider two different scenarios. When consumers are characterized by hedonic quality preferences, in this case the pollution tax is more efficient than the campaign. On the contrary, when consumers develop environmental quality preferences, there are cases in which the campaign is preferred. To sum up, while both policy instruments are effective in reducing pollution emissions, their efficiency viewed from a welfare perspective crucially depends on consumers' environmental awareness.

In this paper we analyze the private and public incentives towards skill acquisition when the skill level of workers determines the quality level of goods, and both labor and product markets are non competitive. We delve into the mechanisms that determine the equilibrium skill acquisition outcomes and show that both "pure" (training set by either firms or unions only) and "mixed" (training set by firms and unions) training scenarios may emerge at equilibrium. We show that firms have generally greater training incentives than unions, resulting in a higher product quality. In line with empirical evidence, we also find that the wage di fferential between high-skill workers and low-skill workers is lower when the training levels of the workforce are selected by unions than by firms. Finally, we analyze the optimal public training skill levels and demonstrate that both unions and fi rms under-invest in training in comparison with the social optimum. Yet, in this case the skill premium is the lowest.

This paper investigates the key role played by different factors, such as the use of Asset Backed Commercial Paper as collaterals in the short-term debt market, credit risk and the injection of liquidity by Central Banks through so-called unconventional measures, on the persistent spread during the subprime crisis bet. The empirical analysis shows that, in addition to credit risk, a relevant variable for explaining the interbank rate dynamics is the outstanding volume in the Asset Backed Commercial Paper market. In short, the large spread observed in the market is explained by the inter-relationship between collateralized short-term debt markets and the unsecured interbank market. It is also shown that Central Bank "non-conventional" intervention variables are relevant in affecting the spread both in the long-run but mostly in the short-run.