Public Economics Commons^™

Does The Legal System Affect The Cost Of External Financing? Evidence From Ipo Underpricing Of Foreign Firms Listed In U.S. Stock Markets, Shaokang Wang, Jing Jiang

WCBT Faculty Publications

To study the effect of the legal system on the cost of external financing, we examine the degree of underpricing of the IPOs by foreign companies listed in U.S. We find that firms from highly corrupted countries have larger IPO underpricing. The quality of the home-country public law enforcement reduces the degree of IPO underpricing. In particular, the criminal sanction for violations of securities laws is the most significant factor in reducing underpricing. The evidence shows that even when a non-U.S. firm meets sophisticated U.S. regulations and goes public in a U.S. exchange, the degree of underpricing is still influenced …

Monetary Expansion And Bank Credit: A Lack Of Spark, Lucjan T. Orlowski

WCBT Faculty Publications

This paper aims to evaluate the effects of the Federal Reserve monetary expansion over thepast 15 years on the credit channel of monetary policy transmission. To do so, we analyze the allocation of the Fed vast liquidity injections by the U.S. banks. The underlying hypothesis is that the considerable monetary expansion neutralized the bank credit expansion as banks channeled borrowed liquidity into other assets.

The monetary expansion was propelled by the financial crisis of 2007–2008. The crisis led to the rapid deterioration of asset performance and liquidity of the banking system. Among the key factors contributing to the crisis was …

Integration Of Central And Eastern European And The Euro-Area Financial Markets: Repercussions From The Global Financial Crisis, Lucjan T. Orlowski, Anna Tsibulina

WCBT Faculty Publications

We examine integration of financial markets and banking sectors in Central and Eastern Europe and the euro area. We study co-movements between government bond and equity markets of Germany and those of Poland, Czech Republic, Hungary, as well as Slovenia and Slovakia (the two recent euro members). We assume that financial integration is essential for subsequent monetary convergence, as it will enable the euro candidates to mitigate systemic risk and avert potentially destabilizing shocks. Government bond yields of the Czech Republic and Poland show high correlation with German yields, in contrast to those of the remaining countries. Equity returns of …

A Theory Of Vertical Political Interaction In Cigarette Taxation, Khawaja Mamun

WCBT Faculty Publications

This paper examines the political interdependence of federal and state cigarette tax rates. We develop a lobby group model where a state’s endogenous reaction to a federal cigarette tax hike depends crucially on the political responses of the cigarette producer and anti-smoking lobby groups.

Monetary Policy And Inflation In The European Monetary Union – Perspectives And Lessons, Lucjan T. Orlowski

WCBT Faculty Publications

The paper examines systemic changes in monetary policies in Europe that have played a pivotal role in containing inflation. It emphasizes the connection between the systemic evolution of monetary policies and the precepts of the original as well as the new generation policy models prescribed by the ‘Washington Consensus’. It further underscores the importance of key criteria of optimum currency area (labor mobility, trade openness, symmetric consumer preferences and political integration) for viability and further future enlargement of the euro area. For the candidates to the euro flexible inflation targeting policies that encompass the euro-convergence parameters are suggested.

Implications Of Erm2 For Poland's Monetary Policy, Lucjan Orlowski, Krzysztof Rybinski

WCBT Faculty Publications

We propose an extension to the inflation targeting regime currently pursued by Poland. It incorporates the exchange rate stability constraints as imposed by the obligatory participation in the ERM2 that Poland needs to satisfy prior to adopting the euro. The modified policy is based on the forward-looking inflation targeting supplemented with the exchange rate stability objective. Its effective implementation depends on the determined long-term equilibrium exchange rate and the observed degree of exchange rate volatility. Both are empirically estimated by employing the Johansen cointegration tests and the threshold generalized autoregressive heteroscedasticity model with the in-mean extension and generalized error distribution …

The Relevance Of Inflation And Exchange Rate Risk For Monetary Convergence To The Eurozone, Lucjan Orlowski

WCBT Faculty Publications

This study places a strong emphasis on the ability of Central European Countries to lower inflation and exchange rate risk premiums on their path of monetary convergence to the eurozone. A model of the nexus between both risk premiums is presented along with the recent evidence supporting well-coordinated interactions between these risk premiums for Poland, Hungary and the Czech Republic. The analysis implies that monetary policies based on direct inflation targeting are likely to contain these risk premiums in the candidate countries and can be effectively used during the remaining period of their preparations for entering the euro area.

Volatility Of Central Europe Exchange Rates: Reaction To Financial Contagion, And Policy Recommendations For European Union Accession, Lucjan T. Orlowski, Thomas D. Corrigan

WCBT Faculty Publications

Examines the volatility of the exchange rates in Central Europe. Role of capital account liberalization and financial market integration in exchange rate stability; Remedies employed to financial problems of each countries; Impact of Asian and Russian financial crises on currencies of Central European countries; Recommendations for European Union accession.

Exchange-Rate Policies In Central Europe And Monetary Union, Lucjan Orlowski

WCBT Faculty Publications

Looks at the relationship between exchange-rate and monetary policies in transition economies (TEs) in central Europe bent on becoming part of the European Union. Review of practiced targets of monetary policy in response to the requirements of monetary union; Question of whether or not candidates will resort to a final currency devaluation; Suggestions for adjustments in short- and long-term monetary policy.

Russia's Economic Stability: Recent Evidence And Policy Implications, Lucjan T. Orlowski

WCBT Faculty Publications

No abstract provided.

Social Safety Nets In Central Europe: Preparation For Accession To The European Union?, Lucjan Orlowski

WCBT Faculty Publications

Examines policy solutions aimed at reducing unemployment and at improving the pension and other social security systems in Central European countries. Reformulation of social safety nets and income transfers in preparation for accession to the European Union; Delay of structural adjustment; Prolongation of high unemployment; Inclusion of other elements not included in the existing programs.