Asymmetric Effects of Deregulation
Title | Asymmetric Effects of Deregulation PDF eBook |
Author | Wesley W. Wilson |
Publisher | |
Pages | 44 |
Release | 1992 |
Genre | Deregulation |
ISBN |
Learning from Deregulation
Title | Learning from Deregulation PDF eBook |
Author | Edward Ludwig Glaeser |
Publisher | |
Pages | 0 |
Release | 2020 |
Genre | COVID-19 (Disease) |
ISBN |
During the COVID-19 pandemic, states issued and then rescinded stay-at-home orders that restricted mobility. We develop a model of learning by deregulation, which predicts that lifting stay-at-home orders can signal that going out has become safer. Using restaurant activity data, we find that the implementation of stay-at-home orders initially had a limited impact, but that activity rose quickly after states' reopenings. The results suggest that consumers inferred from reopening that it was safer to eat out. The rational, but mistaken inference that occurs in our model may explain why a sharp rise of COVID-19 cases followed reopening in some states.
The Redistributive Effects of Financial Deregulation
Title | The Redistributive Effects of Financial Deregulation PDF eBook |
Author | Mr.Anton Korinek |
Publisher | International Monetary Fund |
Pages | 42 |
Release | 2013-12-17 |
Genre | Business & Economics |
ISBN | 148430795X |
Financial regulation is often framed as a question of economic efficiency. This paper, by contrast, puts the distributive implications of financial regulation center stage. We develop a model in which the financial sector benefits from risk-taking by earning greater expected returns. However, risktaking also increases the incidence of large losses that lead to credit crunches and impose negative externalities on the real economy. We describe a Pareto frontier along which different levels of risktaking map into different levels of welfare for the two parties. A regulator has to trade off efficiency in the financial sector, which is aided by deregulation, against efficiency in the real economy, which is aided by tighter regulation and a more stable supply of credit. We also show that financial innovation, asymmetric compensation schemes, concentration in the banking system, and bailout expectations enable or encourage greater risk-taking and allocate greater surplus to the financial sector at the expense of the rest of the economy.
The Asymmetric Effects of Financial Frictions
Title | The Asymmetric Effects of Financial Frictions PDF eBook |
Author | The Asymmetric Effects of Financial Frictions |
Publisher | |
Pages | |
Release | 2012 |
Genre | |
ISBN |
Economic variables are known to move asymmetrically over the business cycle: quickly and sharply during crises, but slowly and gradually during recoveries. Not known is the fact that this asymmetry is stronger in countries with less-developed financial systems. This new fact is documented using cross-country data on loan interest rates, investment, and output. The fact is then explained using a learning model with endogenous flows of information about economic conditions. Asymmetry is shown to be stronger in less-developed countries because these countries have greater financial frictions, which are captured in the model by higher monitoring and bankruptcy costs. These greater frictions magnify the crisis reactions of lending rates and economic activity to shocks and then delay their recovery by restricting the generation of information after the crisis. Empirical evidence and a quantitative exploration of the model show that this explanation is consistent with the data.
Asymmetric Information and the Market Structure of the Banking Industry
Title | Asymmetric Information and the Market Structure of the Banking Industry PDF eBook |
Author | Mr.Giovanni Dell'Ariccia |
Publisher | International Monetary Fund |
Pages | 32 |
Release | 1998-06-01 |
Genre | Business & Economics |
ISBN | 145195154X |
The paper analyzes the effects of informational asymmetries on the market structure of the banking industry in a multi-period model of spatial competition. All lenders face uncertainty with regard to borrowers’ creditworthiness, but, in the process of lending, incumbent banks gather proprietary information about their clients, acquiring an advantage over potential entrants. These informational asymmetries are an important determinant of the industry structure and may represent a barrier to entry for new banks. The paper shows that, in contrast with traditional models of horizontal differentiation, the steady-state equilibrium is characterized by a finite number of banks even in the absence of fixed costs.
Job Protection Deregulation in Good and Bad Times
Title | Job Protection Deregulation in Good and Bad Times PDF eBook |
Author | Mr.Romain A Duval |
Publisher | International Monetary Fund |
Pages | 44 |
Release | 2017-12-14 |
Genre | Business & Economics |
ISBN | 1484333012 |
This paper explores the short-term employment effect of deregulating job protection for regular workers and how it varies with prevailing business cycle conditions. We apply a local projection method to a newly constructed “narrative” dataset of major regular job protection reforms covering 26 advanced economies over the past four decades. The analysis relies on country-sector-level data, using as an identifying assumption the fact that stringent dismissal regulations are more binding in sectors that are characterized by a higher “natural” propensity to regularly adjust their workforce. We find that the responses of sectoral employment to large job protection deregulation shocks depend crucially on the state of the economy at the time of reform——they are positive in an expansion, but become negative in a recession. These findings are consistent with theory, and are robust to a broad range of robustness checks including an Instrumental Variable approach using political economy drivers of reforms as instruments. Our results provide a case for undertaking job protection reform in good times, or for designing it in ways that enhance its short-term impact.
Asymmetric Effects of Economic Activityon Inflation
Title | Asymmetric Effects of Economic Activityon Inflation PDF eBook |
Author | Mr.Douglas Laxton |
Publisher | International Monetary Fund |
Pages | 56 |
Release | 1994-11 |
Genre | Business & Economics |
ISBN |
This paper examines the evidence on asymmetries in the effects of activity on inflation. Data for the G-7 countries are found to strongly support the view that the inflation-activity relationship is nonlinear, with high levels of activity raising inflation by more than low levels decrease it. In the face of such asymmetries, the average level of output in an economy subject to demand shocks will be below the level of output at which there is no tendency for inflation to rise or fall, contrary to the implications of linear models. One implication of these results is that policymakers can raise the average level of output over time by responding promptly to demand shocks, thus reducing the variance of output around trend.