Delegation as a form of economic diversification?
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Delegation plays a crucial role in economic diversification by addressing overload costs and moral hazard issues. It allows for the efficient running of multiple projects by different managers, reducing both overload costs and external financing problems. In the context of central banks and sovereign wealth funds, delegation affects the optimal degree of asset class diversification abroad. Central banks tend to prioritize safer foreign assets to manage balance of payments, while sovereign wealth funds, acting on behalf of the Treasury, may opt for riskier assets to maximize expected utility. The differences in diversification strategies between these entities are influenced by delegation of responsibilities and various economic parameters like equity return volatility and available public foreign assets for management.
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7 Citations | Delegation is crucial for firms to diversify effectively by reducing overload costs and mitigating moral hazard issues, enabling them to exploit the benefits of diversification. |
| Delegation in the context of economic diversification refers to how government responsibilities influence asset allocation strategies between central banks and sovereign wealth funds for optimal diversification. | |
Open access•Posted Content 5 Citations | Delegation is crucial for firms to diversify effectively by reducing overload costs and mitigating moral hazard issues, enabling them to exploit the benefits of diversification. |
Open access•Posted Content | Delegation in economic diversification is explored in the paper, showing how central banks and sovereign wealth funds differ in asset class diversification strategies based on delegated responsibilities. |
Open access•Posted Content 8 Citations | Delegation in economic diversification is discussed in the paper regarding how central banks and sovereign wealth funds differ in optimal asset class diversification strategies based on their responsibilities and objectives. |
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