Network Regulation

This paper assesses how price regulation for energy, water,telecommunications, and rail networks has developed in the twodecades since incentive regulation was introduced. Regulationis necessary because Coasean bargaining is unlikely to produceefficient outcomes, and because the consumer and the firm haverelationship-specific capital and are unable to write long-termcontracts. Incentive regulation has been successful at promotingoperating efficiency in the UK and elsewhere. Incentive regulationhas, so far, also been successful at promoting investment, butsome challenges remain for regulators and policy-makers. Therelationship between the required cost of capital and the extentto which prices are allowed to track costs is explored, andthe implications of the recent large increases in debt-to-equityratios for regulation is discussed. Footnotes ¹ E-mail address: simon.cowan{at}economics.oxford.ac.uk     

Redesigning Regulation of Pensions and Other Financial Products

We observe that financial regulation is ever-growing, with thelatest area to experience increased supervisory attention beingpensions. Yet this has not made the financial world or consumerssafer, and for pensions in particular there are unexpected andundesired consequences. We explore the current policy approachto supervision, which is ‘bottom up’, i.e. assessmentand regulation of individual institutions, with the aim ofmakingthe financial system safe by making each institution safe. Weshow that this is both damaging (because it stifles innovation)and does not work (because risk will always be squeezed fromthe regulated institutions to the less regulated and less seen).Instead, we advocate a ‘top-down’ approach, whichfocuses on making the system safe first. We conclude that onceyou have made systems safe, detailed supervision of individualinstitutions is less necessary, thus reducing the burden ofsupervision. We believe that this approach will lead to a moresuitable and diverse treatment of different risks that willincrease both systemic and consumer safety. ‘If you haveten thousand regulations you destroy all respect for the law’,Winston Churchill (1931). ‘The ultimate result of shieldingmen from the effects of folly is to fill the world with fools’,Herbert Spencer (1891). Footnotes ¹ E-mail addresses: n.barr{at}lse.ac.uk; john_nugee{at}ssga.com     

略论代位权制度

代位权具有其基本的法律特征，作为债权人代位权的成立要件，必然是债权人对债务人的债权要合法、债务人享有时第三人的合法债权、债务人怠于行使其权利且怠于行使到期债权的行为须对债权人的到期债权造成损害。因此，作为代位权的成立，一是债务人的债权不是专属于债务人自身的债权；二是到期债权应当具有金钱给付内容。     

The Rationale for Occupational Pensions

Employers and employees have no incentive to include pensionsas part of employment contracts unless the pension completesa missing market, or ameliorates an imperfection in existingcapital or labour markets. We examine the influence on the choiceand design of occupational pensions of capital- and labour-marketimperfections. In capital markets, we focus on basis risks,taxation, employer default risks, transactions costs, portfoliorestrictions, and liquidity constraints. Aspects of labour marketsaffecting occupational pensions may be the presence of firm-specifichuman capital, asymmetric information between firms and potentialhires, the presence of moral hazard, and internal labour marketsin firms which cause employers to attempt to control the retirementbehaviour of workers. The implications of this analysis of occupationalpensions for public policy towards pensions are briefly examined. Footnotes ¹ E-mail address: dg.mccarthy{at}imperial.ac.uk     

Measuring and Managing the Costs of Red Tape: A Review of Recent Policy Developments

Over the last few years, red tape has come to be identifiedas an important policy area, and there has been rapid and relativelywidespread adoption—in one form or another—of aDutch-developed set of reforms aimed at significantly reducingthe costs of compliance with government-imposed obligationsto provide information (which have come to be referred to as‘administrative burdens’). This paper begins byexamining the characteristics of the policy problems that thesereforms are intended to address, and highlighting some of thechallenges that the reforms can be expected to face. The Dutch-developedapproach, and the UK adaptation of it, are then described, andspecific ways in which the reforms have sought to influenceinformation and incentive conditions—so as to generatereductions in administrative burdens—are assessed. Footnotes ¹ E-mail address: tim.keyworth{at}rpieurope.org     

Regulation and Productivity Performance

The paper reviews theory and evidence on the ways in which regulationaffects productivity outcomes. In a context of endogenous growth,it is argued that traditional measures of compliance costs missthe potentially most important impacts of regulation on productivitywhich occur through changes in incentives to invest and to innovate.Recent attempts to measure cross-country variations in the strengthof product-market and employment regulation are considered andsome weaknesses are highlighted. Nevertheless, consistent withendogenous growth models, there appears to be quite strong evidencethat regulations which inhibit entry into product markets havean adverse effect on TFP growth in OECD countries. Althoughthere are some discrepancies in the evidence, on most measuresthe UK appears lightly regulated relative to France and Germany,and this may have contributed to a reduction in the recent pastin the UK's TFP gap. Footnotes ¹ E-mail address: n.crafts{at}warwick.ac.uk     

The Structural Pension Reform in Chile: Effects, Comparisons with Other Latin American Reforms, and Lessons

Chile pioneered a structural reform in Latin America that privatizedits public pension system and influenced similar reforms inanother nine countries. Twenty-five years later, this articleevaluates the macroeconomic, microeconomic, and social effectsof this reform in Chile and the other countries in the region,and extracts lessons from those experiences. Fiscal costs ofthe reform have been high and prolonged, exceeded capital accumulation,and had a negative impact on national savings, but Chile's reformhas contributed to the development of capital markets; employer'scontributions were eliminated or reduced in half of the countriesand the worker's share in the total contribution averages 65per cent; competition is afflicted by a small number of administratorsand a high level of concentration; administrative costs arehigh and stagnant; capital returns are fair but declining; portfoliodiversification has been achieved only in Chile and Peru; labour-forcecoverage has declined in all ten countries, and gender and incomeinequalities have expanded. Footnotes ¹ E-mail addresses: aarenas{at}dipres.gob.cl; cmesa{at}usa.net     

A New Pension Settlement for the Twenty-First Century? The UK Pensions Commission's Analysis and Proposals

This article summarizes the analysis and recommendations ofthe UK Pensions Commission, which reported in November 2005.The UK faces similar demographic challenges to other nationsfrom increasing longevity and past fertility declines. However,in the face of them, both state and private pension provisionare in decline for younger cohorts. The Commission proposesreforms to the state pension system which would make it moregenerous, less means-tested, and more universal than it wouldotherwise become. This would require both higher public spendingon pensions as a share of GDP than now, and a gradual increasein state pension age after 2020. It also proposes establishmentof a new National Pension Savings Scheme, into which workerswould be automatically enrolled (with the right to opt out)if they were outside good employer provision, together withmeasures to facilitate later and more flexible retirement. Footnotes ¹ E-mail address: j.hills{at}lse.ac.uk     

Job Protection: The Macho Hypothesis

This paper shows that the stringency of employment protectionin Mediterranean countries can be partly explained by culturalvalues embedded in religion. Both the security provided by thislegislation and its redistributive effects in favour of themale breadwinner insiders fit into the framework of Mediterraneanreligions. First, international individual surveys allow usto document that Catholics and Muslims are more likely to agreewith traditional gender division of work than Protestants andthe non-religious. Second, we develop a political economy modelpredicting that employment protection should be more stringentin countries where there is a larger share of insiders supportiveof traditional family values. We then show that this predictionis supported by empirical evidence on OECD countries over theperiod 1970–99. Footnotes ¹ E-mail addresses: yann.algan{at}ens.fr; cahuc{at}ensae.fr     

Pension Challenges and Pension Reforms in Oecd Countries

The 30 OECD member countries have very diverse pension systems.Current old-age public pension spending varies between lessthan 1 and more than 10 per cent of gross domestic product (GDP).Public spending on pensions per person aged 65 or over variesfrom less than 15 to more than 40 per cent of economy-wide GDPper head. For workers entering the labour market today, thetarget pension from all mandatory sources for an average earnervaries between 30 and 100 per cent of individual earnings. Recentpension reforms have a number of common themes. First, pensioneligibility conditions have been tightened. Second, the indexationof pensions in payment has become less generous. Third, somepension schemes link benefit levels to changes in life expectancy.Finally, a number of countries have introduced defined-contributionpensions: privately managed schemes where the pension benefitdepends on contributions and investment returns. Footnotes ¹ E-mail addresses: peter.whiteford{at}oecd.org; edward.whitehouse{at}oecd.org     

Improving Productivity--Opening the Black Box

Hourly productivity levels in the UK still remain behind thosein some competitor countries. The government devotes much policyattention to enhancing productivity and continues to emphasiseits five drivers—investment, innovation, skills, enterprise,and competition. This article argues that it is investment broadlydefined that is the key to sustained productivity improvement.The emphasis should be on improving productivity simultaneouslywith improving the quality of production. Only thus will thegains be widely shared. In achieving these aims there are twoprerequisites for policy-makers. The first is to ensure bettercoordination of policy than appears to be currently achievedby the present departmental structures in Whitehall. The secondis to recognize fully the long and complex chain of causationthat can be triggered by pulling on one policy lever. Such complexitycan only be fully understood by more research on what actuallygoes on inside the black box of the organization. Footnotes ¹ E-mail addresses: ken.mayhew{at}ox.ac.uk; a.neely{at}cranfield.ac.uk     

Financial Restraints in a Mature Welfare State--The Case of Denmark

The Scandinavian welfare states are mature in the sense of havinga high level of standards for public provisions of welfare servicesas well as a high replacement level for income transfers, especiallyfor low-income groups. In this welfare model, individuals havebasic rights to welfare services and social transfers independentlyof their ability to pay, their labour-market history, etc. Thefinancial viability of the model relies on a high tax burdenand a high level of labour-force participation for males andfemales. Evaluated on the basis of international comparisonsof income levels and inequality, the model has performed well.In a forward-looking perspective, however, the welfare modelfaces problems that may put the financial viability of the modelat risk. Two important challenges are demographic changes andthe so-called growth dilemma (increased demand for servicesand leisure). We discuss these issues using Denmark as an exampleand argue that while these two challenges may be of the sameorder of magnitude, it is easier to propose solutions to thedemographic challenges than to the growth dilemma which areconsistent with the basic principles of the welfare state. Footnotes ¹ E-mail addresses: tandersen{at}econ.au.dk; lhp{at}dreammodel.dk     

Regulatory Capture: A Review

This article reviews both the theoretical and empirical literatureson regulatory capture. The scope is broad, but utility regulationis emphasized. I begin by describing the Stigler–Peltzmanapproach to the economics of regulation. I then open the blackbox of influence and regulatory discretion using a three-tierhierarchical agency model under asymmetric information (in thespirit of Laffont and Tirole, 1993). I discuss alternative modellingapproaches with a view to a richer set of positive predictions,including models of common agency, revolving doors, informationallobbying, coercive pressure, and influence over committees.I discuss empirical work involving capture and regulatory outcomes.I also review evidence on the revolving-door phenomenon andon the impact that different methods for selecting regulatorsappear to have on regulatory outcomes. The last section containsopen questions for future research. Footnotes ¹ E-mail address: dalbo{at}haas.berkeley.edu     

Institutions and Rural Stagnation in Eastern Indonesia

This article addresses why agricultural productivity is still very low in peripheral parts of eastern Indonesia. The paper identifies rules and norms underpinning traditionalism. It further addresses how increased land-use efficiency can be supported while maintaining communal land ownership. Information collected from in-depth interviews was analysed based on new institutional economics (NIE) theory. I argue that the government, adat leaders, the Catholic Church, leading businesses, and internationally funded NGOs are organisations contributing to the status quo. Policy recommendations include awareness among international donors of what NGOs really do. Civil society organisations could contribute to a more efficient and democratic government and less feudalist traditional leadership. A government tax on fertile land could form the basis for a cadastre system, secure farmers’ permanent land-user rights, and also enhance land productivity, without reducing the values of a rich culture based on communal land.     

THE UK ECONOMY: ANALYSIS AND PROSPECTS

In this section of the Review, Oxford Economic Forecasting providesan analysis of the current economic climate in the UK and abroadas well as setting out the main features of its latest forecast.In Section II, the UK forecast up to 1988 is described. In SectionIII, following the theme of this issue, we analyse the roleof public investment in the UK. Footnotes ¹We are grateful to Vanessa Rossi for her helpful comments.     

Fiscal Stabilization Policy and Fiscal Institutions

In this paper we analyse counter-cyclical fiscal policy withinthe context of a microfounded analysis of business-cycle stabilization.We show that tax and spending instruments can have a usefulcounter-cyclical role, even after allowing for the distortionarynature of the instruments and the need for debt sustainability.A critical barrier to the use of fiscal instruments may be politicaleconomy concerns, and we survey recent suggestions involvingalternative fiscal policy institutions. Footnotes ¹ E-mail addresses: c.b.leith{at}socsci.gla.ac.uk; s.wren-lewis{at}exeter.ac.uk     

The Assessment: Gender and the Life Cycle

This assessment is an introduction to the Oxford Review of EconomicPolicy's issue on gender and the life cycle. It sets the stageby providing background information on various dimensions ofgender differences, pointing out differences across countriesas well as over time, and relates this evidence to the papersthat follow. It further briefly reviews the articles in theissue and puts them into context. Footnotes ¹ E-mail address: c.dustmann{at}ucl.ac.uk     

The Interactions between Fiscal Policy and Monetary Policy

This paper studies the interactions of fiscal policy and monetarypolicy when they stabilize a single economy against shocks ina dynamic setting. If both policy-makers are benevolent, then,in our model, the best outcome is achieved when monetary policydoes nearly all of the stabilization. If the monetary authoritiesare benevolent, but the fiscal authority discounts the future,or aims for an excessive level of output, then a Nash equilibriumwill result in large welfare losses: after an inflation shockthere will be excessively tight monetary policy, excessive fiscalexpansion, and a rapid accumulation of public debt. However,if, in these circumstances, there is a regime of fiscal leadership,then the outcome will be very nearly as good as when both policy-makersare benevolent. Footnotes ¹ E-mail addresses: t.kirsanova{at}exeter.ac.uk; jari.stehn{at}bnc.ox.ac.uk;david.vines{at}economics.oxford.ac.uk     

Monetary and Fiscal Theories of the Price Level: The Irreconcilable Differences

The fiscal theory of the price level (FTPL) has attracted muchattention but disagreement remains concerning its defining characteristics.Some writers have emphasized implications regarding interest-ratepegging and determinacy of rational expectations solutions,whereas others have stressed its capacity to generate equilibriain which price-level trajectories mimic those of bonds and differdrastically from those of money supplies. We argue that theFTPL attained prominence precisely because it appeared to providea theory whose implications differ greatly from conventionalmonetary analysis; accordingly we review monetarist writingsto identify the primary distinctions. In addition, we reviewrecent findings concerning learnability—and thereforeplausibility—of competing rational expectations equilibria.These indicate that when FTPL and monetarist equilibria differ,the latter are more plausible in the vast majority of cases.Under Ricardian assumptions, necessary for clear distinctions,theoretical analysis indicates that fiscal and monetary coordinationis not necessary for macroeconomic stability. Footnotes ¹ E-mail addresses: bmccallum{at}cmu.edu; edward.nelson{at}stls.frb.org     

The Macroeconomic Role of Fiscal Policy

This article examines the new consensus that fiscal policy shouldhave no macroeconomic role in ‘flexible inflation targeting’regimes. There is little basis for this presumption. Fiscalpolicy remains important in setting the policy mix and in managingshocks and imbalances. The credibility of an inflation-targetingregime should be enhanced rather than reduced if fiscal policyplays its proper role. It is true, nevertheless, that the costsof focusing fiscal policy narrowly on public-sector concernsmay not be very great, most of the time. However, when interestrates cannot be used, the role of fiscal policy must be different.With interest rates at their lower bound of zero, there is noplausible alternative. For asymmetric shocks and adjustmentsin EMU, fiscal policy needs, ideally, to substitute for theinterest-rate policy reaction function of the consensus, butthe difficulties are very great. We suggest a policy focus onreal exchange rates as a way of resolving some of the dilemmas.There is a serious danger that orthodox views about fiscal policy,drawn from the consensus, will be inappropriately applied, especiallyin Europe. Footnotes ¹ E-mail addresses: christopher.allsopp{at}new.ox.ac.uk; david.vines{at}economics.oxford.ac.uk