Theo Nyreröd, Giancarlo Spagnolo, 28 May 2018

The European Commission has recently proposed a directive that provides horizontal protection for whistleblowers in the EU. This could put the EU on a par with the US with respect to protection, but recent episodes of retaliation suggest that it may not be enough. This column compares the whistleblower protection policies in the EU and the US and argues that reward programmes are particularly appropriate for specific regulatory areas where wrongdoing can cause substantial harm.

Botond Köszegi, 25 May 2018

Classical economics holds that regulation prevents individuals from making free decisions about purchases, by limiting their range of choices. Botond Kőszegi discusses his research that suggests this may not be the case. For complex purchase decisions involving contracts, regulation informs the way individuals search the marketplace, and enables them to search a greater range of products. This video was recorded at the 2018 RES Conference.

Filipa Sá, 15 May 2018

There is growing concern among households and policymakers alike that house prices in England and Wales are being driven up by foreign buyers making investment purchases. Filipa Sá examines the link between foreign investment and house prices, using local authority data over a span of 15 years. This video was recorded at the 2018 RES annual conference.

Rocco Macchiavello, 25 April 2018

Jihad Dagher, 22 March 2018

Three hundred years of financial regulation offer a cautionary tale to today’s push against yesterday’s regulations. This column revisits the political economy of financial crises and documents a consistent pattern of politically driven procyclical regulations. These regulatory cycles have a poor track record.  

Colin Mayer, 24 January 2018

Following the 2008 financial crisis, investments recovered quicker in the US than in Europe. Colin Mayer discusses how taxation and regulation have exacerbated companies' long-term debt problem. This video was recorded at the RELTIF book launch held in London in January 2018.

Zsofia Doeme, Stefan Kerbl, 24 January 2018

Risk weights define each bank's minimum capital requirements, but many doubt the comparability of the risk weights that banks report. This column quantifies the variability of these weights across banks, and finds that the country where a bank is headquartered creates statistically significant and economically important differences. Model output floors, as recently agreed upon by the Basel Committee, would reduce this unintended risk weight heterogeneity.

Yener Altunbaş, Simone Manganelli, David Marques-Ibanez, 14 November 2017

Prudential supervision of banks has increasingly relied on capital requirements. But bank capital played a relatively minor role in predicting bank solvency during the Global Crisis, except for scarcely capitalised banks. This column argues that while capital is a helpful tool to support bank financial stability, it is complex for supervisors to calibrate it precisely. Macroprudential authorities should be able to complement capital-based tools with additional, borrower-based prudential instruments.

Richard Baldwin, Thomas Huertas, Tessa Ogden, 13 October 2017

The Global Crisis started ten years ago and proved a turning point in global economic policy. CEPR organised a high-level conference to discuss whether the regulatory reaction has been sufficient and where the next crisis might come from. This column summarises the conference discussions and introduces a set of video interviews with leading economists at the conference, including Paul Krugman, Anat Admati, John Vickers, Paul Tucker, among others.

Stephen Cecchetti, Kim Schoenholtz, 27 September 2017

Financial firms have paid fines totalling more than $9 billion for manipulating LIBOR, yet this flawed benchmark has not been replaced. This column argues that there are reduced incentives for banks to participate in setting the LIBOR rate, and so the potential of, and incentives for, manipulation remain. Although LIBOR is unsustainable, international regulators are working to produce more robust alternatives and to smooth the transition.

Rachel Griffith, Martin O'Connell, Kate Smith, 21 March 2017

Governments have long used taxation to correct for the socially costly overconsumption of alcohol, but as the external cost of overconsumption varies across drinkers, a single tax rate is not optimal. This column argues that variation in preferences for different products and in price responsiveness across heavy and light drinkers provides scope to improve welfare by varying tax rates across alcohol products. The proposed framework is well suited to addressing other sources of external costs, such as obesity.

Mary Amiti, David Weinstein, 12 February 2017

We are living in a world in which banks are large relative to the economies they serve. This column uses comprehensive data on Japanese banks from 1990 to 2010 to examine how the fates of individual banks matter for aggregate performance. Much of the fluctuation in Japanese aggregate investment appears to be driven by the idiosyncratic successes and failures of a limited number of institutions, and there is good reason to believe that the situation is similar in many developed countries.

Kristin Forbes, Dennis Reinhardt, Tomasz Wieladek, 23 December 2016

Globalisation is in retreat, but while the slowdown in trade is widely recognised, what is more striking is the collapse of global capital flows. This column shows how banking deglobalisation is a substantial contributor to the sharp slowdown in global capital flows. It finds that certain types of unconventional monetary policy, and their interactions with regulatory policy, can have important global spillovers. Policies designed to support domestic lending may have had the unintended consequence of amplifying the impact of microprudential capital requirements on external lending.

Lionel Fontagné, Gianluca Orefice, 18 December 2016

Regulation is a barrier to trade. This column uses French firm-level panel data to assess how technical barriers to trade impact firms’ exports. In the presence of stringent barriers, exporters balance the cost of complying with this regulation against the fixed cost of entering a new market. Barriers reduce the number of exporting firms in each sector-destination, especially in sectors with many multi-destination firms.

Jon Danielsson, Robert Macrae, 08 December 2016

Political risk is a major cause of systemic financial risk. This column argues that both the integrity and the legitimacy of macroprudential policy, or ‘macropru’, depends on political risk being included with other risk factors. Yet it is usually excluded from macropru, and that could be a fatal flaw.

Ross Levine, Chen Lin, Wensi Xie, 07 October 2016

Many policies have been put in place to constrain the expansion of banks across economic borders, in part to avoid them becoming too big and interconnected to fail. However, some argue that such expansion can reduce risk. This column evaluates the impact of geographic expansion on the cost of a bank’s interest-bearing liabilities. Geographic diversification materially lowers bank holding companies’ funding costs, suggesting there is a real cost of restricting banks from using geographic expansion to diversify their risks.

Peter Gal, Alexander Hijzen, 27 September 2016

Product market reforms are seen as a way to boost output in advanced economies, but we know little about their short-term impact. This column presents data from 18 advanced economies that reveal large differences in the potential upside of reform depending on the sector in which a firm operates, its size, and its financial health.

Alex Edmans, 23 September 2016

During political campaigns, candidates often set their sights on CEO compensation as a target for potential regulation. This column considers the various arguments for regulating CEO pay and questions whether it is a legitimate target for political intervention. Some arguments for regulation are shown to be erroneous, and some previous interventions are shown to have failed. While regulation can address the symptoms, only independent boards and large shareholders can solve the underlying problems.

Marco Buti, José Leandro, Plamen Nikolov, 25 August 2016

The fragmentation of financial systems along national borders was one of the main handicaps of the Eurozone both prior to and in the initial phase of the crisis,  hindering the shock absorption capacity of individual member states. The EU has taken important steps towards the deeper integration of Eurozone financial markets, but this remains incomplete. This column argues that a fully-fledged financial union can be an efficient economic shock absorber. Compared to the US, there is significant potential in terms of private cross-border risk sharing through the financial channel, more so than through fiscal (i.e. public) means.

Tobias Adrian, Nellie Liang, 14 August 2016

Recent research into how monetary policy frameworks incorporate risks to financial stability has shown that policy affects both financial conditions and financial vulnerabilities that amplify negative shocks. This column argues that looser monetary policy improves financial conditions, but can in some situations worsen vulnerabilities through incentives for financial sector risk-taking and non-financial sector borrowing. Policymakers face an intertemporal trade-off between financial conditions and vulnerabilities which may impact a cost-benefit analysis of monetary policy.

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