Short-term pain for long-term gain: Market deregulation and monetary policy in small open economies

This paper explores the effects of labor and product market reforms in a New Keynesian, small open economy model with labor market frictions and endogenous producer entry. We show that it takes time for reforms to pay off, typically at least a couple of years. This is partly because the benefits materialize through firm entry and increased hiring, both of which are gradual processes, while any reform-driven layoffs are immediate. Some reforms – such as reductions in employment protection – increase unemployment temporarily. Implementing a broad package of labor and product market reforms minimizes transition costs. Importantly, reforms do not have noticeable deflationary effects, suggesting that the inability of monetary policy to deliver large interest rate cuts in their aftermath – either because of the zero bound on policy rates or because of the membership in a monetary union – may not be a relevant obstacle to reform. Alternative simple monetary policy rules do not have a large effect on transition costs.     

An analysis of eurobonds

We analyse different forms of debt mutualisation in a union of countries. One country suffers from a political distortion and may resort to (partial) debt default. We consider a debt repayment guarantee, which can be “unlimited” or ”limited”, i.e. only be invoked when the guarantee threshold is not exceeded. We also explore the ”blue–red” bonds proposal, under which blue debt is guaranteed, while red debt is not guaranteed. Only a suitably chosen limited guarantee induces the government to reduce debt and raises union welfare. This result is upheld under the time-consistent solution when there are costs to the rest of the union of not providing financial rescue. Making the guarantee also conditional on sufficient structural reform may in addition stimulate reform effort, thereby raising union welfare.     

The international spillover effects of pension reform

This paper explores how pension reforms in countries with PAYG schemes affect countries with funded systems. We use a two-country two-period overlapping-generations model, where the countries only differ in their pension systems. We distinguish between the case where a reform potentially leads to a Pareto improvement in the PAYG country, and where this is impossible. In the latter case, the funded country shares both in the costs and the benefits of the reform. However, if a Pareto-improving pension reform is feasible in the PAYG country, a Pareto improvement in the funded country is not guaranteed.     

New Models for Old-Age Security: Experiments, Evidence, and Unanswered Questions

The escalating costs of traditional social security systemsare forcing countries to reevaluate the formal programs thatprovide income maintenance support to the aging. This articlesuggests a reform strategy built around three systems, or "pillars,"to provide old-age security—a public pillar with mandatoa private, mandatory savings plan, and a voluntary savings system.Three variations of this model are being implemented in differentcountries: the Latin American model, in which individual workerschoose an investment manager for their retirement finds; theOECD model, in which employers, union trustees, or both choosethe investment manager for an entire company or occupation;and the Swedish notional account model, a reformed pay-as-you-gofirst pillar that may be supplemented by a second, funded pillar.Preliminary empirical evidence on the efficiency and growtheffects of pension reform, mostly from Chile, indicates thatthe impact on national saving and financial market developmentand, through these, economic growth, has been positive and possiblylarge. Problems concerning high administrative costs and regulationsthat distort investment decisions remain to be resolved, however.      

Pro-poor indirect tax reforms,with an application to Mexico

This paper proposes a methodology for testing for whether tax reforms are pro-poor. This is done by extending stochastic dominance techniques to identify tax reforms that will be deemed absolutely or relatively pro-poor by a wide spectrum of poverty analysts. The statistical properties of the various estimators are also derived in order to make the method implementable using survey data. The methodology is used to assess the pro-poorness of possible reforms to Mexico’s indirect tax system. This leads to the identification of several possible pro-poor tax reforms in that country. It also shows how the pro-poorness of a tax reform depends on one’s conception of poverty as well as on the revenue and efficiency impact of the reform.     

The Post-Reform Bid-Ask Spread Disparity between Nasdaq and the NYSE

We report further evidence of the difference in execution costs between Nasdaq and the NYSE before and after the 1997 market reforms. We find that informed trading costs are consistently higher on Nasdaq both before and after the reforms. In the pre‐reform period the Nasdaq‐NYSE disparity in bid‐ask spreads cannot be completely attributed to the difference in informed trading costs. However, in the post‐reform period the spread difference between these two markets becomes insignificant with the effect of informed trading costs controlled. Our findings are consistent with the contention that the reforms have largely reduced noninformation trading costs and dealers' rents.     

Counting the cost,reconciling the benefits: understanding employer investment in Higher Apprenticeships in accounting

Lack of progression to higher education amongst those who complete an Advanced Apprenticeship in England and the country’s need for higher level skills led to the introduction of Higher Apprenticeships in 2009. Whilst Higher Apprenticeships would be expected to facilitate learner progression, the volume of these has remained low. In this paper, the example of accountancy training illustrates that Higher Apprenticeships are typically introduced into a crowded qualification landscape where they likely replace or subsume existing vocational qualifications. Based on employer case studies, the paper explores the factors employers consider when deciding to invest in this form of training and finds that the net costs of training are central. Higher Apprenticeships often simply substitute for other previously used modes of accountancy training, providing the same core qualification but there are some added benefits of the Apprenticeship including widening the employers’ recruitment pool for accounting technicians. As Apprenticeship reforms evolve, it will be down to the value employers place on this route compared to standalone qualification to the same level, which will determine the viability of Higher Apprenticeships in the accounting space.     

An Empirical Evaluation of the Costs of Harmonizing Romanian Accounting with International Regulations (EU Directives and IAS/IFRS)

After the fall of communism, Romanian accounting has undergone several waves of reform. The first began with the 1991 Accounting Law and its 1993 Regulations implementing a French-inspired accounting chart and guidelines. The second wave of reform produced Regulations (in 1999 and 2001) for the harmonization of large entities' accounting with EU accounting directives and International Accounting Standards/International Financial Reporting Standards (IAS/IFRS). An interesting feature was the inclusion of IASB's conceptual framework into the text of these Regulations. Our study seeks to identify and evaluate the costs of harmonizing Romanian accounting with international regulations (EU Directives and IAS/IFRS). We hypothesize that three types of costs are prevalent: personnel training costs, consultants' fees and costs to adjust existing information systems. We also hypothesize that harmonization benefits are noticeable for those entities that make frequent use of foreign finance and for those entities with majority foreign shareholders. To collect data, we sent out questionnaires to the finance directors of listed Romanian companies. As full application of IAS/IFRS by non-financial companies has recently been postponed until 2007, we also comment on the benefits and costs of gradual reforms as opposite to a one-step adoption of IAS/IFRS.     

Verfassungsrechtliche Vorgaben für Sozialversicherungsreformen

German social insurance is to adapt to societal changes and requires reforms if it is not to fail in its protective purpose. The Constitution sets framework conditions for such reforms: It allows for further development and changes in existing structures, yet it also postulates consistency, protects acquired rights and urges existing social security systems to be effective. The legislator may not completely dispense with risk protection. At the same time, the Constitution grants the legislator sufficient scope for action, since he may lay down the type and level of security. However, the Constitution also ensures a certain continuity through the protection of confidence, as drastic restructuring measures may entail great costs with respect to the transition of protected rights.     

Pensions in the transformation process: the situation in Hungary, the Czech Republic and Slovakia

Conclusion The decisive reform approach taken in Hungary shows that radical reforms can be undertaken, although Hungary has had the advantage that its financial markets were already comparatively well developed. Some of the greatest challenges facing the transition countries in the coming years will be in the social field. Success in meeting these challenges will go a considerable way to determining the prospects for economic growth. In this, the labour market situation remains one of the most important aspects. In the final analysis, the number of employed contribution-payers determines the scope for old-age provision. There is no single ideal concept for pension reform. The question of whether changes in the existing pay-as-you-go system will suffice or more far-reaching measures are required can only be answered with a view to the concrete conditions prevailing in each individual country. While from a social point of view a gradual transition is to be preferred, the longer governments wait to take the necessary steps, the harsher and less popular the necessary measures are likely to become in future. Overall it can be expected that the three-pillar model of pension insurance will spread in the transition countries, i.e. part of the public pension insurance system will be converted to the fully funded principle.     

Decision-analytic refinements of the precautionary principle

In public decision making about uncertain technological hazards, the precautionary principle calls for prompt protective action rather than delay of protections until scientific uncertainty is resolved. The precautionary principle has a sound basis in decision theory, particularly in situations where the potential hazards are serious and the costs of protective actions are tolerable. This article suggests that the precautionary principle should be refined to address three complications: (1) situations where the exposures to be reduced or prevented may have beneficial as well as hazardous consequences; (2) situations where the protective action itself will create potential hazards; and (3) situations where targeted research investments, coupled with delay of protective action, are likely to support wiser public decisions than prompt protective action. Each of these complications is shown to be relevant to contemporary policy debates about application of the precautionary principle. The usefulness of the precautionary principle in public decision making will be enhanced if these decision-analytic refinements are adopted in formal definitions of the principle.     

The Changing Face of the Auditor's Report: Implications for Suppliers and Users of Financial Statements

The International Auditing and Assurance Standards Board (IAASB) recently finalised several significant and controversial reforms of the audit reporting model. The reforms are in response to long‐standing criticisms about the form and content of the existing audit report. This study critically examines the current audit report reforms and their implications. In particular, we investigate the perceptions of prominent stakeholders in respect of these reforms and then evaluate the implications of the reforms on the informational value of the audit report, audit quality and audit costs. The findings suggest that the changes to the audit report are of significant informational value to users, while the implications for audit quality are unclear. Indeed, the changes would increase audit costs and potentially the legal liability of auditors. This appraisal is timely given the efforts made by the IAASB in commissioning these reforms to enhance the relevance and informational value of the audit report.     

Analyst Reputation,Communication, and Information Acquisition

Earlier studies have shown that reputational concerns tend to reduce agents' opportunistic behavior. However, a recent study by Morris argued that analysts' (experts') reputational concerns may discourage truthful communication when they try to avoid being perceived as being misaligned with investors. In this paper, I examine the effect of reputational concerns on communication in a setting where analysts can choose their precision endogenously. Because both misaligned and aligned analysts want investors to trust their reports in the future, both will aim to build a reputation for being aligned. In equilibrium, aligned analysts will acquire more information than misaligned analysts. As a result, investors may favorably update their beliefs about the analysts' type when the report is proven to be accurate. Therefore, both types of analysts will have reputational incentives to communicate truthfully. The paper also derives conditions under which the analysts' reputational concerns have a nonmonotonic impact on aligned analysts' equilibrium precision choices and investors' welfare.     

Capital market imperfections and the theory of optimum currency areas

This paper studies how within- and cross-country capital market imperfections affect the welfare effects of forming a currency union. The analysis considers a bank-only world where intermediaries compete in Cournot fashion and monitoring and state verification are costly. The first part determines the credit market equilibrium and the optimal number of banks, prior to joining the union. The second part discusses the benefits from joining a currency union. A competition effect is identified and related to the added monitoring costs that banks may incur when operating outside their home country, through an argument akin to the Brander-Krugman “reciprocal dumping” model of bilateral trade. However, in our framework, whether joining a union raises welfare of the home country is ambiguous; it depends on the relative strength of “investment creation” and “intermediation diversion” effects.     

The new leader's guide to diagnosing the business

Incoming CEOs and general managers don't have much time to show what they can do to improve a business's performance. (In 2006, for instance, about 40% of CEOs who left their jobs had lasted an average of just 1.8 years--and many of them were ushered out the door.) Within a few years at most, leaders must find ways to boost profitability, increase market share, overtake a competitor--whatever the key tasks may be. But they can't map out specific objectives and initiatives until they have accurately assessed their companies' distinctive strengths and weaknesses and the particular threats and opportunities they face. In this article, Bain consultants Gottfredson, Schaubert, and Saenz provide a diagnostic template to help organizations figure all that out so they can decide which goals are reasonable and where to focus performance-improvement efforts. The template is built on four widely accepted principles. First, costs and prices almost always decline; second, your competitive position determines your options; third, customers and profit pools don't stand still; and fourth, simplicity gets results. Along with each principle, the authors offer diagnostic questions and analytic tools. Of course, each manager will emphasize certain elements of the template and de-emphasize others, based on his or her business situation. This process will show incoming CEOs and general managers where they are starting from (their point of departure) and help them establish their performance objectives (their point of arrival) as well as the change initiatives that will take them where they want to go.     

养老金制度改革中的工会影响——以智利和阿根廷为例

1981年智利养老金私有化改革取得了巨大的成功并创造了可观的利润,同时也为整个拉丁美洲的养老金改革树立了良好的榜样.但是通过对智利和阿根廷社会福利发展的政治经济模式进行分析,发现养老金私有化会令工人凝聚力下降,但同时也为工会创造更多获取对养老基金投资的控制权的机会.在两国的养老金改革过程中,工会具有的组织吸引力和凝聚力及其对于金融管理专业技能的掌握促进其在在养老基金管理方面的进一步参与.这为现阶段进一步引导我国工会参与社会保障机制完善提供有力借鉴.     

Reforming Banks Without Destroying Their Productivity and Value

Government‐protected banking systems tend to blow up, imposing huge losses on taxpayers. In a recent much‐publicized book, The Bankers' New Clothes, Anat Admati and Martin Hellwig propose to fix this problem by forcing banks to maintain 25% of their assets in the form of equity rather than debt. But this author argues, the book overstates the benefits and understates the costs of the proposed reform, while also failing to identify additional necessary reforms. Because bank equity is not true equity, and equity must be evaluated only in relation to risk, increasing required book equity ratios will not necessarily reduce the risk of bank failure significantly. Raising equity requirements is also socially costly because it reduces banks' willingness to lend. When banks need to raise their equity‐to‐asset ratios, they often choose to do so by cutting back on new loans, rather than paying the high costs of raising new equity. The reduction in loan supply that comes from raising equity ratios can be substantial, and is not just a one‐time cost. Balancing the costs and benefits of higher equity implies a much lower required equity ratio than the 25% posited in The Bankers' New Clothes. Finally, because equity ratios relative to risk should be the focus of prudential regulation, additional regulatory policy reforms that strengthen incentives for more effective risk management are needed in addition to higher capital ratios.     

Damages Caps, Insurability, and the Performance of Medical Malpractice Insurance

This article uses the complete property‐casualty insurance files of the National Association of Insurance Commissioners from 1984 to 1991 to assess the effect of medical malpractice reforms pertaining to damages levels and the degree to which these damages are insurable. Limits on noneconomic damages were most influential in affecting insurance market outcomes. Several punitive damages variables specifically affected the medical malpractice insurance market, including limits on punitive damage levels, prohibitions of the insurability of punitive damages, and prohibition of punitive damages awards. Estimates for insurance losses, premiums, and loss ratios indicate effects of reform in the expected directions, where the greatest constraining effects were for losses. The quantile regression analysis of losses indicates that punitive damages reforms and limits were most consequential for firms at the high end of the loss spectrum. Tort reforms also enhanced insurer profitability during this time period.     

银行信息披露制度与银行系统稳定性研究

建立商业银行信息披露制度是我国金融改革中较重要的一环,一般的认识是信息制度的建立将使金融机构运作更审慎,有利于提高整个金融系统的稳定性;但本文通过博弈模型证明:赋予我国商业银行国家信用与进行信息披露制度之间存在着一定的冲突,目前我国对金融体系的过度保护反而会降低商业银行信息披露的对银行体系稳定性的改进,合适的改革次序应是国家信用在金融机构中的先行退出也即建立一个合适的存款保险制度,其次才是规范的信息披露制度的建立.     

国企“混改”与企业金融资产配置

本文利用2010～2017年中国沪深A股非金融类上市公司面板数据,考察了国企“混改”对企业金融资产配置的影响,并重点分析了国企“混改”过程中企业金融资产配置的动机。结果显示,非国有股东参股促进了国有企业的金融资产投资。机制检验发现,非国有股东参股通过治理效应路径和融资约束路径共同影响了国有企业的金融资产配置行为,具体表现为非国有股东参股带来的监督治理效应和融资约束强化效应均增强了国有企业配置金融资产的预防性储蓄动机,进而促使国有企业增加金融资产投资。上述研究结果表明,非国有股东参股推动的国有企业金融资产投资并非出于短期利益追逐,而是为了平滑企业投资进行的预防性储蓄。本文研究对于如何通过深化混合所有制改革引导企业“脱虚向实”有一定的借鉴意义。