Found 553 article(s) in category 'Regulation'

Long-term Carbon Policy: The Great Swap

Long-term Carbon Policy: The Great Swap. Joseph Aldy, November 2016, Paper, “In the past two decdes, the mounting risks posed by climate change have motivated businesses, cities, states, national governments, and the international community to pledge to take action to reduce their greenhouse gas emissions. Given the scale of the problem, the breadth of action must be effective and must set the foundation for increasing mitigation efforts over time. Thus, delivering on these pledges will require effective policies to drive the deployment of low-carbon technologies today and technological innovation in the future to ramp ambition up on par with the risks of climate change.Link

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Why Have M&A Contracts Grown? Evidence from Twenty Years of Deals

Why Have M&A Contracts Grown? Evidence from Twenty Years of Deals. John Coates, October 26, 2016, Paper, “Over 20 years, M&A contracts have more than doubled in size – from 35 to 88 singlespaced pages in this paper’s font. They have also grown significantly in linguistic complexity – from post-graduate “grade 20” to post-doctoral “grade 30”. A substantial portion (lower bound ~20%) of the growth consists not of mere verbiage but of substantive new terms. These include rational reactions to new legal risks (e.g., SOX, FCPA enforcement, shareholder litigation) as well as to changes in deal and financing markets (e.g., financing conditions, financing covenants, and cooperation covenants; and reverse termination fees).Link

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Political economy of Clinton’s ambitious energy program

Political economy of Clinton’s ambitious energy program. Joseph Aldy, 2016, Opinion, “Hillary Clinton’s campaign has stressed her continuity with Obama’s energy policy on key aspects such as decarbonization of the US economy, technological innovation and global cooperation. However, policy reforms to deliver long-term climate goals might be out of reach in a highly divided Congress.” Link

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Understanding Bank Risk through Market Measures

Understanding Bank Risk through Market Measures. Lawrence Summers, Fall 2016, Paper, “Since the financial crisis, there have been major changes in the regulation of large banks directed at reducing their risk. Measures of regulatory capital have substantially increased; leverage ratios have been reduced; and stress-testing has sought to further assure safety by raising levels of capital and reducing risk-taking. Standard financial theories predict that such changes would lead to substantial declines in financial market measures of risk.” Link

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Securing Property Rights

Securing Property Rights. Edward Glaeser, Andrei Shleifer, September 2016, Paper, “A central challenge in securing property rights is the subversion of justice through legal skill, bribery, or physical force by the strong—the state or its powerful citizens—against the weak. We present evidence that the less educated and poorer citizens in many countries feel their property rights are least secure. We then present a model of a farmer and a mine which can pollute his farm in a jurisdiction where the mine can subvert law enforcement. We show that, in this model, injunctions or other forms of property rules work better than compensation for damage or liability rules. The equivalences of the Coase Theorem break down in realistic ways. The case for injunctions is even stronger when parties can invest in power. Our approach sheds light on several controversies in law and economics, but also applies to practical problems in developing countries, such as low demand for formality, law enforcement under uncertain property rights, and unresolved conflicts between environmental damage and development.Link

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Nudges That Fail

Nudges That Fail. Cass Sunstein, September 2016, Paper, “Why are some nudges ineffective, or at least less effective than choice architects hope and expect? Focusing primarily on default rules, this essay emphasizes two reasons. The first involves strong antecedent preferences on the part of choosers. The second involves successful “counternudges,” which persuade people to choose in a way that confounds the efforts of choice architects. Nudges might also be ineffective, and less effective than expected, for five other reasons.Link

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The Fed’s Stress Tests Need to Be Transparent

The Fed’s Stress Tests Need to Be Transparent. Hal Scott, September 16, 2016, Opinion, “The stress tests that big American banks face each year are about to get more stressful. The Fed is planning to substantially increase—by an average of 57%, we calculate—the regulatory capital that the eight largest banks in the U.S. need to pass the annual tests.  Had these expected higher capital levels been in effect this year, it is likely that the country’s four largest banks ( J.P. Morgan Chase, Bank of America, Wells Fargo and Citigroup) all would have failed the test. As a consequence, they would have been barred from remitting more profits to their shareholders.Link

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Long-Range Growth: Economic Development in the Global Network of Air Links

Long-Range Growth: Economic Development in the Global Network of Air Links. Filipe Campante, David Yanagizawa-Drott, September 2016, Paper, “We study the impact of international long-distance flights on the global spatial allocation of economic activity. To identify causal effects, we exploit variation due to regulatory and technological constraints which give rise to a discontinuity in connectedness between cities at a distance of 6000 miles. We show that these air links have a positive effect on local economic activity, as captured by satellite-measured night lights. To shed light on how air links shape economic outcomes, we first present evidence of positive externalities in the global network of air links: connections induce further connections. We then find that air links increase business links, showing that the movement of people fosters the movement of capital. In particular, this is driven mostly by capital flowing from high-income to middle-income (but not low-income) countries.Link

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