Showing papers in "PSL Quarterly Review in 1998"
TL;DR: In this paper, the degree of competition in the Italian banking system is evaluated using a sample of banks during the period 1988-96, using a JEL code of G21.
Abstract: The European banking industry is currently facing the effects arising from the increasing integration of national financial markets. In adapting to this new scenario, the Italian banking system has undergone a considerable transformation. The degree of competition in the Italian banking system is evaluated using a sample of banks during the period 1988-96. JEL Codes: G21 Keywords: Italy, Deregulation, Industry regulations, Government regulation of business, Trade regulation
74 citations
TL;DR: This paper examined the implications of publicly announcing and making this objective explicit and precise, which is common to all Inflation Targeting (IT) countries, but not unique to this group.
Abstract: Perhaps both the most difficult, and the most crucial, decision for a study of how those central banks which have adopted inflation targets have fared is to decide which central banks to include within the chosen set. Nowadays almost all central banks make price stability their main objective. Price stability is regarded, for this policy purpose, as a low rate of inflation, 1 low enough to prevent agents consciously factoring in expectations of future inflation into their price/wage setting decisions. Consequently virtually all central banks have an inflation target, though this may be unquantified and implicit rather than quantified and explicit. Our objective in this paper is not to discuss the adoption of price stability as the main objective for monetary policy, but to examine the implications of publicly announcing and making this objective explicit and precise. An explicitly numerically quantified inflation target is one feature that is common to all Inflation Targeting (IT) countries, but not unique to this group. Several non-IT
51 citations
TL;DR: In this article, an analytical model for balance-of-payment constraints is developed to analyse the economic crisis which swept the entire Mexican region during the early 1980s, and it is shown that a modification of the long-term income multipliers of the proposed framework may be effected by implementing a longterm constant ratio of the current account to nominal gross domestic product.
Abstract: An analytical model for balance-of-payment constraints is developed to analyse the economic crisis which swept the entire Mexican region during the early 1980s. Analytical results suggest that a modification of the long-term income multipliers of the proposed framework may be effected by implementing a long-term constant ratio of the current account to nominal gross domestic product. It is further shown that Mexico's economic instability was largely caused by the inadequacy of foreign exchange resources necessary in driving domestic growth. JEL Codes: E01, G01
42 citations
TL;DR: In this paper, the human development index (HDI) has been found to be ineffective in determining appropriate HDI values and should therefore be dropped and an index can be devised with equal distribution of values of the component variables to correct HDI in proportion to a country's distance from the perfect equilibrium point while differential weighting may be substituted with a line in three dimensional space.
Abstract: Full substitutability and equal weighting principles of the human development index (HDI) have been found to be ineffective in determining appropriate HDI values and should therefore be dropped. An index can be devised with equal distribution of values of the component variables to correct HDI in proportion to a country's distance from the perfect equilibrium point while differential weighting may be substituted with a line in three dimensional space. JEL Codes: A10 Keywords: Methods, Economic indicators, Social economics, Human development index
38 citations
TL;DR: In this article, the authors define systemic risk as the risk of a sudden, unanticipated event that would damage the financial system to such an extent that economic activity in the real economy would suffer.
Abstract: The rapid evolution of financial institutions, products and markets is increasingly challenging the effectiveness of management oversight, market discipline and official supervision. Managing an expanding range of complex products and varied services around the globe and around the clock is a daunting challenge, but it has become business as usual for globally active firms. This operating environment places a premium, as never before, on understanding and managing risk. A key to understanding and managing a firm's own risk is evaluating how effectively counterparty firms understand and manage theirs a task that is, if anything, more challenging than the first because of the limited grounds on which to base such a judgment. Most daunting of all is the difficult task facing national supervisors who are charged with both the prevention of systemic risk and the setting supervisory requirements for the global operations of complex financial conglomerates while operating within the limits of national legal jurisdiction and supervisory charters. Systemic risk may be defined as the risk of a sudden, unanticipated event that would damage the financial system to such an extent that economic activity in the real economy would suffer. To qualify as systemic, shocks must reverberate through and threaten the financial system, not just some small part of it. They may originate inside or outside the financial sector and may include the sudden failure of a major participant in the financial system, a technological breakdown at a critical stage of settlement or payments systems, or a political shock such as invasion or the imposition of exchange controls in an important financial center. Such events can disrupt the normal func-
36 citations
TL;DR: The European Central Bank (ECB) is considered to be an institution with a high level of accountability compared with other central banks as discussed by the authors, however, the matter has yet to be investigated in practice.
Abstract: The European Central Bank (ECB) is considered to be an institution with a high level of accountability compared with other central banks. However, the matter has yet to be investigated in practice. Accountability of the ECB will have to be checked by governing bodies both within and outside the ECB as well as the public. A survey is undertaken of the main reasons for central bank accountability, especially for the ECB. JEL Codes: A01 Keywords: Evaluation, Central banks, European Union. European Central Bank
31 citations
Journal Article•
TL;DR: In this article, the Ricardian equivalence hypothesis was tested on 14 European countries in the 1990s and the relationship between private sector savings and general government deficit, and the GDP growth rate and the unemployment rate were determined.
Abstract: According to the ‘Ricardian’ equivalence hypothesis, consumption is dependent on permanent disposable income and current deficits are equivalent to future tax payments. This hypothesis is tested on 14 European countries in the 1990s. The relationships between private sector savings and general government deficit, and the GDP growth rate and the unemployment rate are determined. The results show the change in consumers' behaviour with respect to government deficit, and that expectations of an increase in future wealth are no longer associated with a decrease in deficit. JEL Codes: E01 Keywords: Europe, Economic aspects
6 citations
Journal Article•
TL;DR: In this paper, the relationship between central banks and inflation is considered in order to disprove existing studies which state that distortions and inflationary bias occur in the real world, but no attempt has been made to examine effects of any third factors.
Abstract: The relationship between central banks and inflation is considered in order to disprove existing studies which state that distortions and inflationary bias occur in the real world. While much attention has been given to the issue in existing studies, no attempt has been made to examine effects of any third factors. Results reveal that inflation is significantly affected by distortionary taxation and that social cohesion leads to price stability in the post Bretton Woods period. JEL Codes: E52, G28
4 citations
TL;DR: In this paper, the authors consider the present financial crisis in South Asia, and how the international system might be better protected from the recurrence of such crises, and suggest a number of ways in which international instability might be mitigated.
Abstract: This essay considers the present financial crisis in South Asia, and how the international system might be better protected from the recurrence of such crises. It argues that, as with all major events, there were many causes. The essay focusses on the general tendency for bank lending to be unstable, which it argues was an underlying condition fro the crisis. The instability constitutes a problem for central banks, banks and their supervisors, both in borrowing countries, and also in lending countries. The essay suggests a number of ways in which international instability might be mitigated. This instability is an aspect of the problem faced by all countries of avoiding over-speculative conditions in domestic financial markets in order to mitigate fluctuations and preserve stable growth. JEL Codes: G15, F34, D02 Keywords: Financial crises, bank lending, financial risk mitigation
4 citations
TL;DR: The distinction between the morning and afternoon sessions of this Conference lies in two expressions: "monetary policy" in the former and'supervision' in the latter, since the term "stability" appears in the general title of the whole Conference, what really marks the difference between today's two sessions is the angle from which stability is being looked at: price stability and, more generally, macroeconomic stability when the subject is monetary policy; the stability of financial institutions and markets, when it is supervision as mentioned in this paper.
Abstract: When Banca Nazionale del Lavoro invited me to speak at this Conference I was a central banker and my position as Chairman of the Basle Committee on banking supervision was probably the reason for the invitation. Since then I have crossed the line that separates central banking and banking supervision from securities and market supervision, and IOSCO has become the arena where I participate in the game of international cooperation among regulatory agencies. My remarks today will not be based on theoretical research, but rather on practical experience with several aspects of supervision: national and international as well as banking and securities. The distinction between the morning and afternoon sessions of this Conference lies in two expressions: 'monetary policy' in the former and 'supervision' in the latter. Globalization is the common denominator. And since the term 'stability' appears in the general title of the whole Conference, what really marks the difference between today's two sessions is the angle from which stability is being looked at: price stability and, more generally, macroeconomic stability when the subject is monetary policy; the stability of financial institutions and markets, i.e. microeconomic stability, when it is supervision. We know that the macro and micro dimensions of stability interact significantly. From the early Eighties, when the Latin American debt crisis erupted, until less than one month ago, when markets tumbled in the Far East, events repeatedly showed how interdependent the macro and microsides of the coin were. This is also why the
3 citations
TL;DR: In this paper, the authors correlate capital gains with the prevalence of inflationary pressures and gyrations on spending in assets and find that capital gains are vital determinants of consumer credit and personal savings.
Abstract: Capital gains are ironically one of the least studied concepts in economics despite their crucial role in national accounting. Although capital gains are technically not involved in the circular flow of production and incomes, they are a vital determinants of consumer credit and personal savings. Recent findings, in fact, correlate capital gains with the prevalence of inflationary pressures and gyrations on spending in assets. JEL Codes: E22 Keywords: Analysis, Economic aspects, Accounting, Capital gains tax
TL;DR: In this paper, the determinants of aggregate income-tax-evasion behavior as reflected in the size of the underground economy in the US are analyzed. And the results show that the size is an increasing function of federal personal income tax rate, the social security tax rate and the public's dissatisfaction with the government.
Abstract: The determinants of aggregate income-tax-evasion behaviour as reflected in the size of the underground economy in the US are analysed. These factors include the federal personal income tax rate, the social security tax rate, the federal corporation income tax rate, the public's dissatisfaction with the government, IRS audit rates and IRS penalty assessments on detected unreported income. The results show that the size of the underground economy is an increasing function of federal personal income tax rate, the social security tax rate and the public's dissatisfaction with the government. However, the size is a decreasing function of IRS penalty payments on unpaid taxes. JEL Codes: H26, E26 Keywords: Research, Underground economy, tax evasion, US economy