Globalization,transparency and economic growth: The vulnerability of Chinese firms to macroeconomic shocks

The process of globalization encompasses economic and financial integration. The abolition of capital controls and the dismantling of barriers of different kinds will expose previously sheltered companies to shocks originating in the global economic arena. Policy-makers in already globalized countries have learned that market participants should be prepared in due time to meet the new exposure to fluctuating rates of exchange, interest and inflation. China has recently adopted a version of the International Financial Reporting Standards (IFRS) in an effort to improve the quality of information available for risk management and for pricing of risk. This paper analyzes the gains in transparency from the implementation of IFRS in Europe as of January 2005 and reports no improvements in regard to the macroeconomic impact on firms. Based on this experience, improvements for Chinese adoption are suggested. The paper presents a framework for how to understand and measure the impact of different scenarios on corporate performance. It also elaborates on how to communicate the macroeconomic effects to external stakeholders of the firm in a way that should foster further economic growth in China.     

Illegal Landings: An Aggregate Catch Self-Reporting Mechanism

To solve the problem of illegal landings this article proposes a new tax mechanism based on the regulator's own aggregate catch estimates and ex ante self-reports of planned catch by fishermen. We show that the mechanism avoids illegal landings while ensuring (nearly) optimal exploitation and generating (nearly) correct entry and exit incentives. Finally we simulate the mechanism for the Danish cod fishery in Kattegat to obtain a rough indicator of the size of the tax. It turns out that the average tax payment as a percentage of profit is surprisingly low.     

Abschaffung der Abgeltungsteuer — gerechter und steuersystematisch einheitlicher?

There is a rising political discussion in Germany around abolishing the final withholding tax on capital income. The German tax reforms that introduced this tax lowered tax rates, in particular on interest income. According to some authors, the growing inequality of income and property is a strong argument for the higher taxation of capital income. However, other authors argue that the neutrality aspects concerning private investment are inadequate. An abolishment of the final withholding tax would not solve these problems and, moreover, would turn back the achieved improvements. Therefore, the German Council of Economic Experts suggests complementing the previous reforms by introducing an allowance for corporate equity.     

Perspektiven und Optionen einer wachstumsorientierten Finanzpolitik

Nachdem sich die Lage der Staatsfinanzen in den vergangenen Jahren deutlich verbessert hat, wird derzeit kontrovers über den Kurs der Finanzpolitik diskutiert. Soll sie weiterhin vorrangig auf Konsolidierung oder eher auf die vielfach als notwendig erachtete Steigerung des Wachstumspotenzials abzielen? Welche M?glichkeiten für eine verst?rkt wachstumsorientierte Finanzpolitik er?ffnen sich und wie sollten sie genutzt werden? Heinz Gebhardt, 55, Dipl.-Volkswirt, ist wissenschaftlicher Mitarbeiter in den Kompetenzbereichen „Wachstum und Konjunktur“ sowie „?ffentliche Finanzen“ des Rheinisch-Westf?lischen Instituts für Wirtschaftsforschung (RWI) in Essen; Dr. Lars Siemers, 34, ist wissenschaftlicher Mitarbeiter im Kompetenzbereich „?ffentliche Finanzen“ des RWI Essen. Die Autoren danken Roland D?hrn, Rainer Kambeck, Tanja Kasten, Christoph M. Schmidt und Joachim Schmidt für kritische Anmerkungen und hilfreiche Kommentare.     

Rentenpaket: die Bundesregierung auf Irrwegen

In the summer of 2014 Germany will witness the most substantial expansion of pension expenditures since the 1950s. Yet, while this reform package was motivated mainly by the dismal prospect of rising old age poverty rates, it does little to alleviate this problem. On the contrary, its two central elements, an expansion of the pension claims of mothers whose children were born before 1992, and access to early retirement at age 63 for workers with a long insurance history, tend to benefit rather privileged groups of the insured. These measures endanger the sustainability of the German pension system and will necessitate future generations to work even longer than would have been the case otherwise.     

Access Pricing,Quality Degradation,and Foreclosure in the Internet

Access to both a local and a global network is needed in order to get complete connection to the Internet. The purpose of this article is to examine the interplay between those two networks and how it affects the domestic public policy towards a domestic provider of local access. We find that a cost-oriented regulation is detrimental to domestic welfare, because it shifts profit to the foreign provider of global access. The optimal policy is that the regulator commits itself to set an access price above costs, possibly the same price as in an unregulated market economy. A regulation of the global access price has a non-monotonic effect on domestic welfare, and there is a potential conflict between international and domestic regulation policy.