Central banking,free banking,and financial crises

A Summary View In the Keynesian view, the central bank is a part of an extramarket remedy to a market malady. Investment markets are inherently unstable; government control of the economy's money supply is an important element in macroeconomic stabilization policy. The case against central banking—and for free banking—reverses the characterization of both remedy and malady. Free banking is a part of a market remedy to an extramarket malady. Even this stark reversal understates the case for free banking. It would remain valid even if we take the dramatic and chronic fiscal irresponsibility of the Treasury as given. Periodic crises that will inevitably occur in such a debt-ridden economic environment would be more ably countered by the market forces of free banking than by the policy moves of a central bank. But the extent of the Treasury's fiscal irresponsibility is itself dependent upon whether the Treasury can count on an accommodating central bank. Free banking limits the scope of this potential source of instability while at the same time enhancing the market's ability to deal with whatever instabilities that may persist.     

寡头竞争、银行资金管理与存款准备金政策

利率和存款准备金政策是影响商业银行资金管理的重要因素.在一个统一的金融市场中,一家银行的利率变动必然受到其它银行利率变动及证券市场利率变动的影响,并且利率也会受到存款准备金政策变动的影响.分析表明,在古诺、勾结和准竞争的市场结构中,证券市场利率和存、贷款利率以及存款准备率和存款利率都具有一致的比较静态效应.     

Aurophobia: or,free banking on what standard?

Murray N. Rothbard is S. J. Hall distinguished professor of economics at the University of Nevada, Las Vegas and editor of theReview of Austrian Economics.     

Regulating the banking industry in transition economies: Exploring interactions between capital and reserve requirements

This paper examines the ‘prudential' role of reserve requirements in transition economies using a general-equilibrium banking model. The analysis stresses the role that reserve requirements may play in enforcing an adequate level of bank capitalization in a context in which it is difficult to assess the true value of bank assets. The paper also explores the interactions that exist between capital and reserve requirements and the effect of these regulations on the financial structure of banks and on the level of credit and interest rates.     

On not doing due diligence: Bagus and Howden on free banking

In their recent article in the Quarterly Journal of Austrian Economics, Bagus and Howden (2010) present “quibbles” with fractional-reserve free banking. Specifically, they raise what they call “unaddressed issues” in this system, with a particular emphasis on Selgin (1988). We deem their arguments to be more substantial than “quibbles” and see them as part of a longstanding debate about fundamental aspects of monetary theory. We respond to their objections and attempt to specify how debate between the two sides might proceed more productively.     

Vickrey auctions with reserve pricing

Summary. We generalize the Vickrey auction to allow for reserve pricing in a multi-unit auction with interdependent values. In the Vickrey auction with reserve pricing, the seller determines the quantity to be made available as a function of the bidders' reports of private information, and then efficiently allocates this quantity among the bidders. Truthful bidding is a dominant strategy with private values and an ex post equilibrium with interdependent values. If the auction is followed by resale, then truthful bidding remains an equilibrium in the auction-plus-resale game. In settings with perfect resale, the Vickrey auction with reserve pricing maximizes seller revenues.Received: 31 December 2002, Revised: 5 May 2003, JEL Classification Numbers: D44, C78, D82.Correspondence to: Lawrence M. AusubelThe authors gratefully acknowledge the generous support of National Science Foundation Grants SES-97-31025, SES-01-12906 and IIS-02-05489. We appreciate valuable comments from Ilya Segal. Special thanks go to Mordecai Kurz, who served as Larry's dissertation advisor and who introduced both authors to the economics profession back at IMSSS at Stanford. Congratulations and best wishes are extended to Mordecai and his family on the happy occasion of the publication of Assets, Beliefs, and Equilibria in Economic Dynamics: Essays in Honor of Mordecai Kurz, in which this article also appears.     

Testing fractional integration with monthly data

Seasonal roots can help to explain the seasonal fluctuations in macroeconomic time series. In this paper we concentrate on monthly data and look at different versions of Robinson’s (1994) tests for testing unit roots and other fractionally integrated hypotheses when the root is located at zero and/or at the seasonal frequencies. A Monte Carlo experiment is carried out to check the power of these tests against different fractional alternatives, and an empirical application, using Spanish monthly data for the consumer price index, is also carried out in the article.     

Regulated firms in pollution permit markets with banking

This paper examines a competitive intertemporal market for bankable emission permits, such as sulfur dioxide allowances. Without profit regulation, firms are willing to bank permits if permit prices rise over time with the rate of interest, but will not bank if prices rise more slowly.The market achieves aggregate emission targets at least total cost if there is no profit regulation, but may not do so if firms are subject to profit regulation. Firms must arbitrage differences both in abatement cost and in the regulatory treatment of permits to achieve least total cost.The impetus for this work came from research we initiated during the Summer of 1990 for the Energy Information Agency. We would like to thank Chuck Howe for his detailed comments and enthusiasm, and Jim Alm, Dave Bjornstad, Charles deBartolome, Mike Greenwood, Robert Hahn, Douglas Hale, Carolyn Lang, Jim Markusen, Edward Morey, Till Requate, and Tom Tietenberg. We are grateful to the editor and two anonymous referees for stressing the importance of regulation in these markets and for their helpful and clarifying advice.     

Deterring collusion with a reserve price: an auction experiment

Experimental Economics - We experimentally compare collusive behaviors in first-price sealed-bid auctions without and with a reserve price. Before the auction begins, a bidder may offer a bribe to...     

The sources of contagion risk in a banking sector with foreign ownership

Foreign-dominated banking sectors, such as those prevalent in Central and Eastern Europe, are susceptible to two major sources of systemic risk: (i) linkages between local banks and (ii) linkages between a foreign parent bank and its local subsidiary. During and after the global financial crisis, the second source of risk has been stressed by local regulators. Using a nonparametric method based on extreme value theory, we analyze interdependencies in downward risk in the banking sectors of the Czech Republic, Poland, Slovakia, and Turkey during 1994–2013. We find that the risk of contagion from a foreign parent bank to its local subsidiary is substantially smaller than the risk between two local banks.     

Pricing currency options in a fractional Brownian motion with jumps

A new framework for pricing the European currency option is developed in the case where the spot exchange rate fellows a fractional Brownian motion with jumps. An analytic formula for pricing European foreign currency options is proposed using the equivalent martingale measure and the estimation method of parameters in the pricing model is given, enabling option prices to be computed efficiently and accurately. For the purpose of understanding the pricing model, some properties of this pricing model are discussed in the latter part of this paper. Finally, the numerical simulations illustrate that our model is flexible and easy to implement.     

Deposit insurance and regulation in a Diamond-Dybvig banking model with a risky technology

Summary Three deposit insurance schemes are studied in a version of the Diamond-Dybvig banking model with a risky technology. The schemes include a full deposit guarantee and two alternatives which people have suggested as ways to limit the moral hazard problem of deposit insurance: deductible and coinsurance. Regulation to suppress the moral hazard problem under each scheme takes the form of solvency and incentive compatibility constraints. When the regulation is relaxed slightly, as it might be under regulatory error, the insurer's payout is lower under the alternatives than under the full guarantee. However, the coinsurance and deductible schemes are less effective at preventing bank runs than the full guarantee. Moreover, in some environments, even the full guarantee itself does not provide enough reassurance to rule out bank runs.I am indebted to Neil Wallace, John Kareken, Ed Green, Nobuhiro Kiyotaki, Andy McLennan, Mike Stutzer, Jan Werner and an anonymous referee for their helpful comments.     

A theory of the non-neutrality of money with banking frictions and bank recapitalization

The unconventional monetary policy actions of the Federal Reserve during the recent Global Financial Crisis often involve implicit subsidies to banks. This paper offers a theory of the non-neutrality of money associated with capital injection into banks via nominal transfers, in an environment where banking frictions are present in the sense that there exists an agency problem between banks and their private-sector creditors. The analysis is conducted within a general equilibrium setting with two-sided financial contracting. We first show that even with perfect nominal flexibility, the recapitalization policy has real effects on the economy. We then introduce banking riskiness shocks and study optimal policy responses to such shocks.     

Unit and fractional roots with deterministic trends in the UK output

In this article, the nominal, real, and real per capita GDP series are modeled in the UK by means of fractionally integrated techniques. A version of the tests of Robinson [1994] are used that permits the incorporation of deterministic trends with no effect on the standard (normal) limit distribution of the tests. The results show that the nominal GDP appears to be nonstationary and non-mean reverting, with its order of integration being much higher than 1. The real GDP also appears to be nonstationary and the order of integration fluctuates widely between 0.6 and 1.2. Finally, the real per capita GDP seems to be stationary, either I(0) or I(d), with D positive but close to 0.     

A strategic market game with a mutual bank with fractional reserves and redemption in gold

We utilize the strategic market game approach to analyze the role and function of a mutual bank with variable fractional reserves, redemption in gold, and endogenous interest rate formation. We specify the conditions of enough money and its distribution. Using the continuum of traders model, we show existence and optimality for the case ofno bankruptcy as well as for the case in which there exists the potentiality of bankruptcy. Finally, we analyze the relationship of the gearing ratio and the bankruptcy penalty with respect to the resulting equilibrium allocations.On these principles it will be seen that it is not necessary that paper money should be payable in specie to secure its value; it is only necessary that its quantity should be regulated according to the value of the metal which is declared to be standard. Ricardo (1965, p. 239)Experience, however shows that neither a state nor a bank ever have had the unrestricted power of issuing paper money without abusing that power; in all states therefore, the issue of paper money ought to be under some check and control; and none seems so proper for that purpose as that of subjecting the issuers of paper money to the obligation of paying their notes either in gold coin or bullion. Ricardo (1965, p. 241)The authors wish to acknowledge the help of discussions held with Pradeep Dubey, John Geanakoplos, Jingang Zhao and the comments of two anonymous referees.     

试论志愿者服务如何促进和谐社会建设

志愿者服务是人类社会文明发展的重要标志,也是未来社会发展的方向。通过举办奥运会,在全社会大力营造志愿服务的氛围,并将志愿服务延伸至社会的各个层面,通过树立志愿服务意识,鼓励更多的人加入到志愿服务的行列,推动和谐社会的建设与发展。本文根据近年来参与志愿服务工作的实践,就如何在构建社会主     

提高对外竞争力:中资银行如何应对挑战

吸收存款对中、外资银行而言都有着重大意义,因为没有存款就缺少发放贷款、创造资产的资金来源,而没有存贷款这两项基本的银行业务,就很难产生中间业务这种派生业务。我国国有商业银行历来追求资产规模的扩张而非利润最大化,因而以“存款立行”为指导思想,千方百计、不计成本地     

Large economies with differential information and without free disposal

We consider exchange economies with a continuum of agents and differential information about finitely many states of nature. It was proved in Einy et al. (Econ Theory 18, 321–332, 2001) that if we allow for free disposal in the market clearing (feasibility) constraints then an irreducible economy has a competitive (or Walrasian expectations) equilibrium, and moreover, the set of competitive equilibrium allocations coincides with the private core. However when feasibility is defined with free disposal, competitive equilibrium allocations may not be incentive compatible and contracts may not be enforceable (see e.g. Glycopantis et al. in Econ Theory 21, 495–526, 2002). This is the main motivation for considering equilibrium solutions with exact feasibility. We first prove that the results in Einy et al. (Econ Theory 18, 321–332, 2001) are still valid without free-disposal. Then, motivated by the issue of contracts’ execution, we adapt the incentive compatibility property introduced in Krasa and Yannelis (Econometrica 62, 881–900, 1994) and we prove that every Pareto optimal exact feasible allocation is incentive compatible, implying that contracts of competitive or core allocations are enforceable. We would like to thank two anonymous reviewers and the Associate Editor for their valuable suggestions and remarks. This work was partially done while V.F. Martins-da-Rocha was visiting the Dipartimento di Matematica e Informatica of the Università degli Studi di Perugia. We thank the audience of the First General Equilibrium Workshop at Rio. Section 6 dealing with contract enforcement and coalitional incentive compatibility has benefited from discussions with J. Correia-da-Silva, W. Daher, F. Forges, C. Hervès-Beloso, E. Moreno-García, K. Podczeck, Y. Vailakis and N.C. Yannelis.