a model of the monetary sector with and without binding capital requirements abstract bank equity is exogenous in the standard deposit and loan expansion multiplier model so that model is inappropriate for analyzing the interaction between monetary and bank regulatory policies this paper examines the effect of a binding capital requirement on the loan expansion process we evaluate how the conflict between the monetary and regulatory authorities evolves when bank equity adjusts to a binding capital requirement we find that capital requirements are not innocuous for monetary policy nevertheless the monetary authority can assert control over the loan expansion process in the long run although multiplier values will differ considerably from those in the standard multiplier model

debt and taxes in the theory of public finance if a specified amount of government spending must be financed how should that finance be divided between taxes and government borrowing in the case of a temporary increase in government spending it has been argued that debt finance is optimal because the small increments in all future tax rates to finance interest payments involves a smaller excess burden than the single large tax rate increase that would be required to avoid an initial increase in the national debt this argument ignores the excess burden of debt finance that results if the initial capital stock is smaller than optimal e g because of taxes or capital income the first section of the present paper shows how the debt finance advantage of a small increase in tax rates can be explicitly balanced against the disadvantage of the excess burden that arises from additional debt the analysis shows that with plausible parameter values the excess burden of debt finance is likely to outweigh the advantage of avoiding a large single tax change and therefore that financing a temporary increase in government spending by an immediate tax increase is likely to be preferable to debt financing the second section examines the appropriate response to a permanent increase in government spending and shows that such spending cannot be financed by a permanent increase in government debt moreover whenever the golden rule level of capital intensity is an optimality condition independent of the level of government spending any increase in government spending should be matched by an equal increase in tax revenue this abstract was borrowed from another version of this item

progress in renewable energy under clean development mechanism in india abstract kyoto protocol was the first agreement regarding control of climate change problems clean development mechanism cdm was included in the kyoto protocol to promote sustainable development in developing countries non annex i countries and assist developed countries annex i countries to achieve their emission reduction targets cdm allows trading of emissions reductions and helps to increase sustainable development in a developing country and reduce global emissions in developed country renewable energy sources are the appropriate alternatives for sustainable development through cdm india is one of the emerging nations in renewable energy sector government of india is trying to enhance energy generation through renewable and carbon trading this paper shows the current status and progress of renewable energy through cdm in india

from theory to practice canadian economists contributions to public finance we survey canadian economists contributions to the field of public finance from the mid 1980s to 2016 we highlight the development and extension of the models and tools of public economics and the empirical studies that have deepened our understanding of the efficiency and distributional issues over a wide range of public finance issues we also highlight contributions to the development of policies through commissioned reports and the important role that canadian institutions the canadian tax foundation the think tanks and the federal and provincial departments of finance have played in shaping tax and fiscal policies de la theorie a la pratique contributions des economistes canadiens a la finance publique on examine les contributions des economistes canadiens au domaine de la finance publique du milieu des annees 1980 a 2016 on souligne le developpement et l extension des modeles et des outils d economie publique et les etudes empiriques qui ont aide a approfondir notre comprehension des enjeux d efficacite et de distribution dans un vaste eventail de questions de finance publique on souligne aussi les contributions des rapports commandites au developpement de politiques publiques ainsi que le role important d institutions canadiennes l association canadienne d etudes fiscales les groupes d experts ainsi que les ministeres des finances du gouvernement federal et des gouvernements provinciaux dans le design des politiques fiscales

the behavior of consumer loan rates during the 1990 credit slowdown abstract this study re examines the 1990 credit slowdown by investigating the loan pricing behavior of commercial banks we find strong evidence that large undercapitalized banks contributed to the credit slowdown by charging consumers a higher than average loan rate relative to better capitalized institutions this disparity in lending exists even after accounting for bank funding costs thus we argue that there was a lending slowdown that occurred among large undercapitalized banks the reluctance to lend among undercapitalized banks is at least suggestive of behavior that is consistent with a credit crunch

how do banks respond to shocks a dynamic model of deposit taking institutions abstract this paper proposes a dynamic model of the optimal choices of a bank that benefits from market power and takes into account the impact of the deposit generation process interbank lending borrowing emerges as a buffer that assists the bank in smoothing intertemporal adjustments in interdependent loan and deposit choices the bank smooths the impact of interest rates shocks on its customers to minimize the adjustments over time of the stocks of deposits and loans it does not however provide insurance against negative shocks of real origin that increase its expected default costs the predictions of the model help to shed light on the available empirical evidence and to analyze some recent developments of the banking industry

assessing the impact of renewable energy deployment on local sustainability towards a theoretical framework renewable energy sources res have a large potential to contribute to the sustainable development sd of specific territories by providing them with a wide variety of socioeconomic and environmental benefits however the existing literature has put much emphasis on the environmental benefits including the reduction of global and local pollutants while socioeconomic impacts have not received a comparable attention these include diversification of energy supply enhanced regional and rural development opportunities creation of a domestic industry and employment opportunities with the exception of the diversification and security of energy supply these benefits have usually been mentioned but their analysis has been too general i e mostly at the national level and a focus on the regional and even more so the local level has been lacking at most studies provide scattered evidence of some of those regional and local benefits but without an integrated conceptual framework to analyse them this paper tries to make a contribution in this regard by developing an integrated theoretical framework which allows a comprehensive analysis of the impact of renewable energy on local sustainability and which can be empirically applied to identify these benefits in different territories

u s deficits since world war i the tax smoothing theory suggests that deficits would respond particularly to recession temporarily high government spending and anticipated inflation my empirical estimates indicate that a relation of this type is reasonably stable in the u s since at least 1916 in particular the statistical evidence does not support the idea that there has been a shift toward a fiscal policy that generates either more real public debt on average or that generates larger deficits in response to recessions further the deficits for 1982 3 and popular projections formed in 1984 for 1984 5 are consistent with the previous structure the high values of these deficits reflect the customary response to substantial recession interacting with big government and to expected inflation

monetary policy and bank lending in the euro area is there a stock market channel or an interest rate channel abstract in this paper i compare a traditional demand oriented model of bank lending with its focus on short term interest rates in the money market to a non traditional capital budgeting model of bank lending based on movements in share valuations for the euro area using non nested hypothesis tests omitted variables tests and granger causality tests i reject the traditional demand oriented model of bank lending and fail to reject the capital budgeting model of bank lending for monetary financial institutions mfi s in the euro area even though europe is a bank based financial system it appears the stock market plays a key role in the lending decisions and allocation of resources in europe one possible policy implication of this research is that the central bank should try and stabilize stock prices in order to achieve their goal of stabilizing bank lending and the economy

do firms get the financing they want measuring credit rationing experienced by small businesses in the u s this paper measures the extent to which small businesses in the united states in the late 1980s were able to access the external credit finance they desired we argue that a comprehensive definition of credit rationing must account for both a creditworthy firms that apply for and are denied financing and b creditworthy firms that decide not to apply for desired external financing given expectations about how long it may take to obtain financing and the evolution of investment opportunities

how capital regulation and other factors drive the role of shadow banking in funding short term business credit abstract this paper empirically analyzes how capital regulation risk and other factors altered the relative use of shadow banking funded short term business debt since the early 1960s results indicate that the share was affected over the long run not only by changing information and reserve requirement costs but also by shifts in relative regulation of bank versus nonbank credit sources such as basel i in 1990 and reregulation in 2010 in the short run the shadow bank share rose when deposit interest rate ceilings were binding on traditional banks the economic outlook improved or risk premia declined and fell when event risks arose

non performing loans moral hazard and regulation of the chinese commercial banking system abstract non performing loans npls represent a major obstacle to the development of banking sector one of the key objectives of the banking sector reforms in china has therefore been to reduce the high level of npls to do so chinese regulatory authorities have injected significant capital into the banking system and scrutinized npls since 2003 this paper examines the impact of npls on bank behavior in china using a threshold panel regression model and a dataset covering 60 city commercial banks 16 state owned banks and joint stock banks and 11 rural commercial banks during 2006 2012 we test whether lending decisions of chinese banks exhibit moral hazard the results support the moral hazard hypothesis suggesting that an increase in the npls ratio raises riskier lending potentially causing further deterioration of the loan quality and financial system instability policy implications of findings are evaluated

are bank holding companies a source of strength to their banking subsidiaries i document evidence that a bank affiliated with a multi bank holding company mbhc is significantly safer than either a stand alone bank or a bank affiliated with a one bank holding company not only does mbhc affiliation reduce the probability of future financial distress but distressed affiliated banks are also more likely to receive capital injections recover more quickly and are less likely to fail over the next year moreover the measured benefits of affiliation are much larger than those that existed before recent reforms of bank holding company regulation suggesting that much of the observed benefit can be attributed to regulation and not the market

why can modern governments tax so much an agency model of firms as fiscal intermediaries we develop an agency model explaining why third party information reporting by firms makes tax enforcement successful while third party reporting would be ineffective with frictionless collusion between firms and employees collusive evasion is impossible to sustain in firms with many employees and accurate business records as any single employee may reveal evasion we embed our agency model into a macro model where the number of employees grows with development showing that the tax take evolves as an s shape driven by changes in third party information we show that our model is consistent with a set of stylized facts on taxation and development

financial in stability supervision and liquidity injections a dynamic general equilibrium approach we develop a dynamic stochastic general equilibrium model with an heterogeneous banking sector we introduce endogenous default probabilities for both firms and banks and allow for bank regulation and liquidity injection into the interbank market our aim is to understand the interactions between the banking sector and the rest of the economy as well as the importance of supervisory and monetary authorities to restore financial stability the model is calibrated against real us data and used for simulations we show that basel regulation reduces the steady state but improves the resilience of the economy to shocks and that moving from basel i to basel ii is procyclical we also show that liquidity injections relieve financial instability but have ambiguous effects on output fluctuations

can regulators allow banks to set their own capital ratios abstract basel regulators have received widespread criticism for failing to prevent two credit crises that hit the u s over the last two decades nonetheless banks were considerably overcapitalized prior to the onset of the 2007 2009 subprime crisis compared to those which had undergone the 1990 1991 recession therefore if capital requirements were achieved prior to the subprime crisis how could the basel framework be blamed again for having accelerated if not caused another credit crunch we find that the answer to this question lies in the relationship between the capital ratio and the leverage ratio which is governed by risk weights categories determined by the basel regulation we show that changes to risk weight categories which affect the correlation pattern between both ratios are not reflected in the subprime crisis this minimizes the implication of the basel ii regulation in the crunch that succeeded its announcement in contrast to basel i we demonstrate that these dynamics are governed by a formula linking the two ratios together which derives from the sensitivity of the risk based capital ratio to a change in its risk weight s one implication of our work regarding the basel iii regulation consists in validating the newly established capital increments in a mathematical rather than heuristical approach

in search of capital crunch supply factors behind the credit slowdown in japan the seeming failure of loose monetary policy to reactivate japan s economy has led some observers to suggest that the usual credit channels through which monetary policy affects the real economy are blocked and this is because of a pervasive shortage of bank capital that has induced a leftward shift in the supply of bank credit this is the so called capital crunch hypothesis this paper finds support for the hypothesis in the bank data for 1997 a year during which the landscape of the japanese financial system underwent some fundamental changes

the taxman tools up an event history study of the introduction of the personal income tax abstract the introduction of income taxation was a landmark in the historical development of the fiscal state of the now developed world this paper presents an event history study of the adoption of the income tax in 17 countries from western europe north america oceania and japan between 1815 and 1939 we find evidence that spending pressures reductions in tax collection costs and to a lesser extent social learning played a significant role for the adoption decision we also find evidence that the extension of the franchise at first reduced the likelihood of adoption of the income tax but eventually as universal suffrage was approached increased the likelihood

a positive model of tax structure the model of tax structure developed in this paper is one in which the composition of revenues and the structure of specific taxes arise naturally as the result of self interested political behavior it is assumed that political agents choose tax structure so as to minimize the political costs or expected net loss in votes associated with raising a budget of given size several hypotheses concerning the nature of political cost functions are developed and applied to an explanation of the differences among u s states in their reliance on income taxation the empirical application emphasizes differences in political constraints across jurisdictions in the belief that much can be learned about the choice of policy instruments by studying structural adjustments in response to varying constraints the paper discusses how the proposed approach differs from or is consistent with that adopted by other authors and how the estimating equation relates to other empirical research in the literature

risk averse bank managers exogenous shocks portfolio reallocations and market spillovers abstract this paper develops a model of the banking market in which individual banks make decisions concerning both the size and risk characteristics of their portfolios and in which actions of one bank spill over to affect actions of other banks various observed banking market behaviors such as herding credit crunches bank reaction to policy changes etc are explained as optimal bank responses to idiosyncratic or systemic shocks

a model of electroral competition with interest groups abstract this letter specifies and analyzes a model of electoral competition with interest groups the assumptions used in the model are drawn from the existing literature we i show that certain assumptions that have been used in empirical analyses of voting provide a sufficient condition for the existence of an electoral equilibrium and ii characterize the equilibrium strategies embodied in the characterization is a set of parameters that can be said to measure the electoral strengths of the interest groups we also state the appropriate definition of the pareto relation for our model and note that each of the equilibrium strategies is pareto optimal

data transformations in dea cone ratio envelopment approaches for monitoring bank performances abstract cone ratio dea data envelopment analysis models are suggested for monitoring and or early warning systems to be used by bank regulatory agencies illustrative examples are developed from data on 1984 and 1985 performances of the 16 largest banks in texas five large non texas banks are introduced as excellent performers to help evaluate these texas banks in terms of their risk coverage as well as efficiency cone ratio envelopment areused to tarnsform original data in order to reflect performances by the non texas banks with respect to risk coverage as well as efficiency formulas for transforming to and from the original data are supplied with accompanying explanations and interpretations which include comparisons with the risk adjusted capital and risk coverage allowances formulas that have been adopted recently by u s government and other regulators in banking and insurance in conformance with the basel agreement of 1988

development challenges under the clean development mechanism cdm can renewable energy initiatives be put in place before peak oil abstract the sustainable development aspect of the clean development mechanism cdm under the kyoto protocol is examined with regard to its current impact on crucial developmental issues the paper discusses the immediate and urgent global concerns of developmental needs energy and climate change whilst highlighting their influence on the poor in the developing world the global responses to address the above concerns in terms of renewable energy technologies policies and strategies that can be instrumental in addressing the issues are discussed with main emphasis on the cdm under the kyoto protocol the critical issue of whether the cdm can address poverty alleviation and sustainable development in developing countries is discussed in the context of existing market principles transparency of the mechanism economics and the daunting bureaucratic procedures involved the paper concludes that the cdm if suitably modified can go some way to address sustainable development and alleviate poverty for poor rural areas and not increase emissions by a focus on renewable energy technologies this result can be achieved as the energy consumption of rural sectors is currently so small relative to developed economies that only small additional renewable energy generation capacities are needed to make a measurable difference

financial crisis and credit crunch in korea evidence from firm level data abstract this paper analyzes the credit crunch following the recent financial crisis in korea using enterprise level data we find that there were big differences in the magnitude of the credit contraction across different types of firms in particular chaebol conglomerate affiliated firms appeared to have lost the preferential access to credit that they had enjoyed in the pre crisis period and credit appears to have been reallocated in favor of more efficient firms this suggests that the credit crunch suffered by certain sectors can be attributed to the adjustment by banks and enterprises to the restructuring of the financial sector rather than tight monetary policy or an external credit constraint

debt and tariffs an empirical investigation of the evolution of revenue systems abstract this paper presents a theoretical framework where government chooses fiscal structure so as to maximize political support and where the evolution of fiscal systems is determined by changing economic political and administrative factors estimating equations are derived and the model is used to explain the development of revenue structure in canada from 1871 to 1913 a period when major revenue sources consisted of the tariff debt and excises the empirical analysis distinguishes between government plans and ex post observations of public revenues and places particular emphasis on the derivation of hypotheses linking economic political and administrative variables to revenue structure

the size of government most research on the causes of growth in government expenditure has focused on the demand for government services in this paper we argue that in fact this growth may have occurred because of changes in supply changes in technology leading to increased specialization and thus increased opportunity costs of self production have led to increased market production and increased record keeping also female labor force participation has increased both of these factors serve to reduce the efficiency cost of collecting taxes if the demand for government spending has not changed this increase in supply would lead to a larger public sector we estimate a system of simultaneous equations for the period 1929 1970 incorporating this hypothesis and the results are consistent with the theory we are able to explain virtually all of the growth of government increases in female labor force participation seems to be a very important variable in this explanation

bank capital requirements business cycle fluctuations and the basel accords a synthesis abstract in order to survey the mechanisms through which the introduction of basel ii bank capital requirements is likely to accentuate the procyclical tendencies of banking this paper brings together the theoretical literature on the bank capital channel of propagation of exogenous shocks and the literature on the regulatory framework of capital requirements under the basel accords we conclude that the theoretical models that revisit the bank capital channel under the new accord generally support the basel ii procyclicality hypothesis and that the magnitude of the procyclical effects essentially depends on i the composition of banks asset portfolios ii the approach adopted by banks to compute their minimum capital requirements iii the nature of the rating system used by banks iv the view adopted concerning how credit risk evolves through time v the capital buffers over the regulatory minimum held by the banking institutions vi the improvements in credit risk management and vii the supervisor and market intervention under basel ii the recent events and instability in financial markets all over the world have led the procyclicality issue to enter the agendas of several political international fora and some measures to mitigate procyclicality are being put forward the bank capital channel literature should now play an important role in evaluating their effectiveness

economic and political foundations of tax structure this paper derives the essential elements of tax systems as the outcome of rational behavior in a model w here government maximizes expected support and where opposition to ta xation depends on the loss in full income the analysis treats the le vel of expenditures as endogenous and integrates the influence of adm inistration costs with that of political and economic factors tax st ructure is shown to be a system of related components in equilibrium a final section compares results to two alternative approaches opti mal taxation and the leviathan model copyright 1988 by american economic association

does bank opacity affect lending abstract examining a sample of bank holding companies in the united states we find that opacity has a negative effect on bank loan growth this effect is more pronounced for banks that are more reliant on wholesale funds a further analysis of the relationship between opacity and wholesale funds confirms our hypothesis that opacity negatively affects lending via a wholesale funding channel moreover our results suggest that the negative effect of opacity on lending is less pronounced for banks with stronger capitalization we also show that this effect was stronger during the 2007 2009 financial crisis and is mitigated by a high gdp growth rate indicating that a strong weak macroeconomic condition tends to mitigate aggravate such an effect

the role of tax bases and collections costs in the determination of income tax rates seigniorage and inflation a growing theoretical literature on optimal taxation predicts that governments will set the tax rates on money holdings and on more traditional tax bases to minimize the deadweight losses of collecting government revenue under the presumption that relative collection costs and tax bases have not changed significantly over time the empirical time series seigniorage literature has focused on the theory s tax smoothing implication finding only weak support we show that changes in collections costs and tax bases played an important role in the determination of tax composition and find stronger support for tax smoothing when this is taken into account

the effect of peru s cdm investments on households welfare an econometric approach abstract the clean development mechanism cdm under the kyoto protocol has two main objectives reducing emissions of greenhouse gases ghgs and contributing to sustainable development sd in developing countries the empirical evidence indicates that the first goal has been fulfilled however the literature mostly provides ex ante evidence regarding the second goal this paper contributes to the literature by assessing the ex post quantitative effect that cdm projects have had on sd employment and monetary welfare in peru a country ranked among the most important cdm investment host countries worldwide the econometric model estimates the direct and indirect effects of the cdm projects investments on peruvian households monetary welfare for 2011 2015 our results suggest that cdm investments had a slight effect on household consumption expenditure and had no effect neither on employment nor in poverty alleviation our findings suggest the need to strengthen cdm s institutional framework by identifying key development definitions and indicators

is three a crowd competition among regulators in banking banks are able to switch among three options for a primary federal regulator the fdic the federal reserve and the occ we examine why they switch and what the results of switches are we find support for the hypothesis that competition among regulators has beneficial aspects regulators seem to specialize in offering banks that are changing strategy the ability to improve performance by switching regulators there is also evidence that the ability to switch regulators allows banks to get away from bank examiners who desire a quiet life that is examiners who attempt to minimize the effort they spend on work

capital requirements and bank behavior in the uk are there lessons for international capital standards abstract the financial crisis prompted widespread interest in developing a better understanding of how capital regulation drives bank behavior this paper uses a unique comprehensive database of regulatory capital requirements on all uk banks to examine their effects on capital lending and balance sheet management behavior we find that capital requirements that include firm specific time varying add ons set by supervisors affect banks desired capital ratios and that resulting adjustments to capital and lending depend on the gap between actual and target ratios we use these results to measure the effects of a capital regime that includes features similar to those embedded in the uk framework our results suggest that countercyclical capital requirements may be less effective in slowing credit activity when banks can readily satisfy them with lower quality lower costing capital elements versus higher quality common equity given the size of the uk banking sector and the global nature of many of the largest institutions in the uk banking sector the results have implications for the ongoing debate surrounding the design and calibration of international capital standards

credit crunch caused by bank failures and self selection behavior in lending markets this study investigates how bank failures affect the real economy from the lenders perspective using experimental settings of unique bank failures in japan this paper identifies the credit crunch effect by bank failures the main findings are the following first bank failures decrease the investments of the client firms by approximately 30 second the high investment growth level firms deal with unhealthy banks these choices generate a self selection bias of 30 80 third there is no evidence that bank failure shock is related to the firms accessibility to other financial sources

can the clean development mechanism cdm deliver abstract the paper investigates whether the clean development mechanism cdm under the kyoto protocol has played a significant role in the development of rural communities specifically investigating uptake of small scale renewable energy projects the investigation involved an assessment of 500 registered small scale cdm projects under the kyoto protocol in terms of their potential impact on the envisaged sustainable development goals for rural communities five case studies from the indian subcontinent were also examined the paper concludes that the cdm in its current state and design has typically failed to deliver the promised benefits with regard to development objectives in rural areas successful projects were found to have had good community involvement and such projects were typically managed by cooperative ventures rather than money making corporations the paper puts forward a new framework for the assessment of such benefits in the hope that future projects can be better assessed in this regard the key problem however remains on how to deal with the inherent contradiction between development and sustainability

dea ar profit ratios and sensitivity of 100 large u s banks abstract several important dea ar concepts were applied here to banking for the first time this application includes classification sensitivity uniqueness linked cones lcs and profit ratios notably large bank behavior seems to be explained better by profit ratios than by relative efficiency measures of dea efficiency ar efficiency and lc profit ratios were made for a bank panel of the u s s 100 largest banks in asset size from 1986 to 1991 high levels of inefficiency were found as in previous studies classification of the dea efficiency measures identified the inefficient dmus with some positive primal slacks sensitivity analysis of the dea efficiency measures showed that the extreme efficient classification was generally relatively insensitive to errors in the data the ars eliminated i 44 to 60 of the dea extreme efficient dmus and ii all of the banks with unprofitable actual profit ratios some statistical analyses highlight the superiority of the lc profit ratios relative to the ar efficiency measures

did risk based capital allocate bank credit and cause a credit crunch in the united states this paper examines the reallocation of bank credit from loans to securities in the early 1990s using data on virtually all u s banks from 1979 to 1992 the authors investigate implementation of risk based capital and other regulatory and nonregulatory changes as possible causes of a supply driven credit crunch the main empirical implication of these credit crunch hypotheses that the reallocation of credit would be most associated with low capital high risk banks generally is not consistent with the data much of the reallocation is associated with demand side factors but it is difficult to differentiate cleanly among these factors copyright 1994 by ohio state university press

capital regulation heterogeneous monitoring costs and aggregate loan quality abstract this paper develops a banking sector framework with heterogeneous loan monitoring costs banks are exposed to the moral hazard behavior of borrowers and endogenously choose whether to monitor their loans to eliminate this exposure after analyzing an unregulated banking system we examine several cases in which regulatory capital requirements bind the notional loan supplies of various subsets of banks to gauge the impact of capital requirements we define loan quality in terms of either the ratio of monitored to total loans or the ratio of monitoring banks to total bank population under the assumption of a specific cross sectional distribution of banks our simulations show that the imposition of binding capital requirements on a previously unregulated banking system unambiguously increases the market loan rate and reduces aggregate lending but has an ambiguous effect on loan quality nevertheless once capital requirements are in place the simulations indicate that regulators can contribute to higher overall loan quality by toughening capital requirements

a theory of competition among pressure groups for political influence this paper presents a theory of competition among pressure groups for political influence political equilibrium depends on the efficiency of each group in producing pressure the effect of additional pressure on their influence the number of persons in different groups and the deadweight cost of taxes and subsidies an increase in deadweight costs discourages pressure by subsidized groups and encourages pressure by taxpayers this analysis unifies the view that governments correct market failures with the view that they favor the politically powerful both are produced by the competition for political favors

political influence economic interests and endogenous tax structure in a computable equilibrium framework with application to the united states 1973 and 1983 we consider the properties of a computable equilibrium model ofa competitive political economy in which the economic interestsof groups of voters and their effective influence on equilibriumpolicy outcomes can be explicitely distinguished and computed the model incorporates an amended version of the gemtap taxmodel calibrated to data for the united states for 1973 and1983 emphasis is placed on how the aggregation of gemtaphouseholds into homogeneous groups affects the numericalrepresentation of interests and influence for representativemembers of each group

risk based capital standards and the credit crunch the failure of the banking system to play its normal role in the transmission of the monetary stimulus to the economy may have contributed to the 1990 91 recession and the sluggish recovery from it this paper examines the 1988 basel agreement on risk based capital standards as a possible shock to the credit supply system and finds that banks with larger capital surpluses resulting from the risk based requirements had faster loan growth between 1987 and 1991 than those with smaller surpluses or which failed the new standards newly issued capital in banks with larger capital surpluses was associated with greater loan growth than were the same capital additions in banks with smaller capital surpluses copyright 1995 by ohio state university press

legislators and interest groups how unorganized interests get represented this paper derives a supply price for public policy using a constrained maximization model in the model three sets of agents each have preferences over outcomes organized interest groups offer campaign contributions to improve their own wealth voters offer votes to obtain outcomes closer to their most preferred outcomes and legislators seek both campaign contributions and votes to obtain reelection a given legislator s supply price for policy is shown to depend on the productivity of his effort as determined by committee assignments priority and ability and by the preferences of his unorganized constituency in the home district two extreme assumptions about the effectiveness of campaign spending in eliciting votes are used to illustrate the comparative statics properties of the model the prediction of the model is that interest groups will in general seek out legislators whose voters are indifferent to the policy the interest group seeks thus voters who do have preferences over policy are in effect represented even though they are not organized

tests of the rational expectations hypothesis this paper reviews evidence on the structure of anticipation from a number of empirical studies jack muth s rational expectations hypothesis is compared with a variety of alternative models including ferber s law the implicit expectations model of edwin mills and muth s new errors in the variables model the cumulative evidence is of such strength as to compel the suspension of belief in the concept of rational expectations this implies that it is a mistake to proceed under the maintained hypothesis that expectations are rational instead it is necessary to test the sensitivity of empirical and theoretical results to alternative assumptions about the structure by which anticipations are generated copyright 1986 by american economic association

bank capital and uncertainty abstract financial frictions in raising external finance can induce banks to self insure against future shocks through holding more bank capital as uncertainty about future losses increases the above reasoning implies that they would choose to increase their capital position this paper tests this hypothesis in a dataset with u s commercial banks by exploiting a cross sectional variation in uncertainty to explain the distribution of bank capital ratios i find statistically significant and robust evidence in support of a self insurance mechanism a counterfactual experiment suggests that a decline in uncertainty to its lowest level generates an average reduction in bank capital ratios of up to 2 percentage points furthermore uncertainty explains on average about half of banks regulatory capital buffers