Tag Archives: Regulation

Tapping the Brakes: Are Less Active Markets Safer and Better for the Economy?

From Joe Stiglitz and summarized by Felix Salmon:

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High Frequency Trading

There has been a lot of buzz about Michael Lewis’s new book and high frequency trading. Eric Budish has a recent paper and proposal that has been getting a lot of attention from policymakers. Here is a Booth debate with Eric … Continue reading

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Do We Need Speed Limits on Freeways?

From Arthur van Benthem: When choosing his speed, a driver faces a trade-off between private benefits (time savings) and private costs (fuel cost and own damage and injury). Driving faster also has external costs (pollution, adverse health impacts and injury to … Continue reading

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Capital Requirements, Risk Choice, and Liquidity Provision in a Business Cycle Model

From Juliane Begenau: This paper presents a quantitative dynamic general equilibrium model for the purpose of determining the optimal capital requirement for banks. Banks play two roles in this model: They contribute to the production of a final good and … Continue reading

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Regulating Consumer Financial Products: Evidence from Credit Cards

The NYTimes has an interesting story on this paper from Sumit Agarwal, Souphala Chomsisengphet, Neale Mahoney, and Johannes Stroebel: We analyze the effectiveness of consumer financial regulation by considering the 2009 Credit Card Accountability Responsibility and Disclosure (CARD) Act in … Continue reading

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A Theory of Macroprudential Policies in the Presence of Nominal Rigidities

From Emmanuel Farhi and Iván Werning, We provide a unifying foundation for macroprudential policies in financial markets for economies with nominal rigidities in goods and labor markets. Interventions are beneficial because of an aggregate demand externality. Ex post, the distribution of … Continue reading

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Impact of “Substantially Heightened” Capital Requirements on Large Financial Institutions

From Anil Kashyap, Jeremy Stein, and Sam Hanson: ABSTRACT: We examine the impact of “substantially heightened” capital requirements on large financial institutions, and on their customers. Our analysis yields three main conclusions. First, the frictions associated with raising new external equity … Continue reading

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On Keeping Your Powder Dry: Fiscal Foundations of Financial and Price Stability

From Maury Obstfeld: Banking systems have rapidly grown to a point where for many countries bank assets amount to multiples of GDP. As a consequence, government’s capacity to provide stability-enhancing fiscal guarantees against systemic crises can no longer be taken for … Continue reading

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The Transitional Costs of Sectoral Reallocation: Evidence From the Clean Air Act and the Workforce

From Reed Walker: New environmental regulations lead to a rearrangement of production away from polluting industries, and workers in those industries are adversely affected. This paper uses linked worker-firm data in the United States to estimate the transitional costs associated … Continue reading

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Jeremy Stein on Regulating Large Financial Institutions

Here‘s Jeremy Stein on regulating large financial institutions. Some have argued that the current policy path is not working, and that we need to take a fundamentally different approach.4  Such an alternative approach might include, for example, outright caps on the … Continue reading

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