Economics Commons^™

Basel Iii B: Basel Iii Overview, Christian M. Mcnamara, Michael Wedow, Andrew Metrick

Journal of Financial Crises

In the wake of the financial crisis of 2007-09, the Basel Committee on Banking Supervision (BCBS) faced the critical task of diagnosing what went wrong and then updating regulatory standards aimed at preventing it from occurring again. In seeking to strengthen the microprudential regulation associated with the earlier Basel Accords while also adding a macroprudential overlay, Basel III consists of proposals in three main areas intended to address 1) capital reform, 2) liquidity standards, and 3) systemic risk and interconnectedness. This case considers the causes of the 2007-09 financial crisis and what they suggest about weaknesses in the Basel regime …

Basel Iii A: Regulatory History, Christian M. Mcnamara, Thomas Piontek, Andrew Metrick

Journal of Financial Crises

From the earliest efforts to mandate the amount of capital banks must maintain, regulators have grappled with how best to accomplish this task. Until the 1980s, regulation had been based largely on discretion and judgment. In the wake of two bank failures, the central bank governors of the G10 countries established the Basel Committee on Banking Supervision (BCBS) and in 1988, the BCBS introduced a capital measurement system, Basel I. The system represented a triumph of the fixed numerical approach, however, critics worried that it was too blunt an instrument. In 1999, the BCBS issued Basel II, a proposal to …

Jpmorgan Chase London Whale Z: Background & Overview, Arwin G. Zeissler, Rosalind Bennett, Andrew Metrick

Journal of Financial Crises

In December 2011, the Chief Executive Officer and Chief Financial Officer of JPMorgan Chase (JPM) instructed the bank’s Chief Investment Office to reduce the size of its Synthetic Credit Portfolio (SCP) during 2012, so that JPM could decrease its Risk-Weighted Assets as the bank prepared to adopt the impending Basel III bank capital regulations. However, the SCP traders were also told to minimize the trading costs incurred to reduce Risk-Weighted Assets, while still maintaining the opportunity to profit from unexpected corporate bankruptcies. In an attempt to balance these competing objectives, head SCP derivatives trader Bruno Iksil suggested in January 2012 …

Incorporating Macroprudential Financial Regulation Into Monetary Policy, Aaron Klein

Journal of Financial Crises

This paper proposes two insights into financial regulation and monetary policy. The first enhances understanding the relationship between them, building on the automobile metaphor that describes monetary policy: when to accelerate or brake for curves miles ahead. Enhancing the metaphor, financial markets are the transmission. In a financial crisis, markets cease to function, equivalent to a transmission shifting into neutral. This explains both monetary policy’s diminished effectiveness in stimulating the economy and why the financial crisis shock to real economic output greatly exceeded central bank forecasts.

The second insight is that both excess leverage and fundamental mispricing of asset values …

Does The Source Of Remittance Matter? Differentiated Effects Of Earned And Unearned Remittances On Agricultural Productivity, Shankar Ghimire, Kul Kapri

College of Humanities and Social Sciences Departmental Research

This paper analyzes the effect of earned and unearned remittances on agricultural productivity in Nepal. This approach differs from the existing practice of studying the impact of total remittances on socio-economic outcomes. In particular, we disaggregate total remittances into earned and unearned remittances, and isolate their impacts on productivity—an individual household’s per labor-hour production of all agricultural output at the market value. Methodologically, we follow a three-stage least squares (3-SLS) approach to overcome the potential endogeneity concerns. We provide evidence that unearned remittances are more effective than earned remittances in increasing agricultural productivity. These results can be useful in understanding …

Nebraska Monthly Economic Indicators: January 22, 2020, Eric Thompson

Leading Economic Indicator Reports

The Leading Economic Indicator – Nebraska (LEI-N) 1 rose by 1.10% during December of 2019. The increase in the LEI-N, which is designed to predict economic activity six months into the future, confirms expectations for moderate economic growth in Nebraska through mid-2020. The leading indicator primarily rose due to strong business expectations. Respondents to the December Survey of Nebraska Business reported plans to increase sales and employment at their businesses over the next six months. There also was a rebound in building permits for single-family homes during the month, suggesting an increase in construction activity mid-year.

Comparison Of 2018 And 2019 Market Facilitation Program Payments For Nebraska Producers, Anil Giri, E. Wesley F. Peterson, Sankalp Sharma

Cornhusker Economics

In a previous issue of Cornhusker Economics ( October 3, 2018, available at https://agecon.unl.edu/ cornhusker-economics/2018/market-facilitationprogram) we reviewed the sequence of events surrounding the trade war between the United States and China, and, in particular, the response of the Trump administration to the retaliatory tariffs imposed by China on soybeans and other agricultural commodities. The Market Facilitation Program (MFP) has been the main mechanism for compensating farmers for losses associated with the trade war. In the past year, there have been several important changes related to these events:

1. On January 15, 2020, the first phase of a trade deal between …

An Illustrated Case For Unemployment Insurance Reform, Christopher J. O'Leary, Stephen A. Wandner

Upjohn Institute Working Papers

We present a graphic case for unemployment insurance (UI) program reform. Through a series of illustrations summarizing historical trends, we show how the UI system has diverged from its intended purposes. Our figures show the decline of the program in addressing its essential aims of paying adequate unemployment compensation during involuntary unemployment and providing reemployment services. We illustrate the big differences in UI programs that have emerged because of the broad discretion afforded states to determine benefit generosity. We also illustrate declines in the financial means for providing benefits and reemployment services and a widening divergence among states in the …

Is Geographical Remoteness An Economic Disadvantage?, Jiaxuan Lu

Undergraduate Economic Review

Is the geographical location of a country deterministic to its level of economic development? Although economic geographers have been searching the answers to this question for decades, incongruities between different opinions still exist. This paper takes both theoretical and empirical approaches to provide a systematic answer to this question. Firstly, this paper uses industry-level gravity model of international trade to demonstrate that not all countries are negatively affected by geographical remoteness. Secondly, it employs a panel data of 83 countries from 2000 to 2017 and substantiates that while geographical remoteness decreases income levels and trade balances in OECD countries, it …

News-Driven Expectations And Volatility Clustering, Sabiou M. Inoua

ESI Publications

Financial volatility obeys two fascinating empirical regularities that apply to various assets, on various markets, and on various time scales: it is fat-tailed (more precisely power-law distributed) and it tends to be clustered in time. Many interesting models have been proposed to account for these regularities, notably agent-based models, which mimic the two empirical laws through a complex mix of nonlinear mechanisms such as traders switching between trading strategies in highly nonlinear way. This paper explains the two regularities simply in terms of traders’ attitudes towards news, an explanation that follows from the very traditional dichotomy of financial market participants, …

Internationalization Of Rmb, Ishrat Husain Dr.

Faculty Research - Talks, Speeches, & Discourse

My remarks this morning are divided into three parts. First, I would like to explore the rationale behind the internationalization of currencies and whether RMB meets the test. Second, what has been the experience with RMB internationalization during the last decade and finally the nature of Pakistan- China bilateral RMB based financial relations.

Optimal Long-Term Health Insurance Contracts: Characterization, Computation, And Welfare Effects, Soheil Ghili, Ben Handel, Igal Hendel, Michael D. Whinston

Cowles Foundation Discussion Papers

Reclassification risk is a major concern in health insurance where contracts are typically one year in length but health shocks often persist for much longer. While most health systems with private insurers emphasize short-run contracts paired with substantial pricing regulations to reduce reclassification risk, long-term contracts with one-sided insurer commitment have significant potential to reduce reclassification risk without the negative side effects of price regulation, such as adverse selection. In this paper, we theoretically characterize optimal long-term insurance contracts with one-sided commitment, extending prior models of this form in several key directions that are important for studying health insurance markets. …

Optimal Long-Term Health Insurance Contracts: Characterization, Computation, And Welfare Effects, Soheil Ghili, Ben Handel, Igal Hendel, Michael D. Whinston

Cowles Foundation Discussion Papers

Reclassification risk is a major concern in health insurance where contracts are typically one year in length but health shocks often persist for much longer. We theoretically characterize optimal long-term insurance contracts with one-sided commitment, and use our characterization to provide a simple computation algorithm for computing optimal contracts from primitives. We apply this method to derive empirically-based optimal long-term health insurance contracts using all-payers claims data from Utah, and then evaluate the potential welfare performance of these contracts. We find that optimal long-term health insurance contracts that start at age 25 can eliminate over 94% of the welfare loss …

Shift-Share Analysis, Appalachian Counties, Randall Jackson, Péter Járosi

Shift Share Analyses

In County-level CIE Supply Chain Analysis, the second of five p a rts o f A n E c onomic A n alysis of the Appalachian Coal Industry Ecosystem posted to the Commission’s website in January of 2018, we developed a set of metrics that were used to provide insights on the past and future supply chain implications of long-term coal industry decline in Appalachia. These metrics were used to identify counties that have been heavily impacted by the decline of the coal industry, those that remain dependent on the coal industry ecosystem (CIE), and among the dependent counties, those …

Estimating The Impacts Of Business Assistance Programs: The Case Of The Manufacturing Extension Partnership And Multi-Year Estimates, Jim Robey, Randall W. Eberts, Kenneth Voytek

Presentations

No abstract provided.

Small Business Innovation Research & Small Business Technology Transfer Programs In Nevada, Kaylie Pattni, Caitlin Saladino, William E. Brown

Economic Development & Workforce

This fact sheet highlights how Small Business Innovation Research (SBIR) and Small Business Technology Transfer Programs (STTR) operate in Nevada. The data is drawn from the Small Business Administration (SBA) website.

How Emotions Affect Farm And Ranch Succession, Allan Vyhnalek

Cornhusker Economics

Whenever a family has a discussion about agricultural estate planning, conversations can become emotionally charged. Stakes can be high and feelings can be hurt just by using the wrong words in a sentence. If things go south and parties are upset, they will likely withdraw from the dialogue or leave the gathering altogether.

When communications or negotiations break down, one way to help is to think about the five emotional blocks that need to be overcome if possible. They are: appreciation, affiliation, autonomy, status and role. Let's examine each to see how these blockages can interfere with a family moving …

A Study Of Claim Resolution Structured Settlement Agreements: Final Report, Marcus Dillender, Kevin Hollenbeck, H. Allan Hunt

Upjohn Institute Technical Reports

The purpose of this project is to evaluate the quality and effectiveness (measured from the perspectives of workers, businesses, and the State of Washington) of structured settlement agreements (SSAs) of workers compensation claims, and to report findings to the state legislature. SSAs were introduced into the state's workers compensation system by legislative action in 2011. The evaluation will include both quantitative and qualitative analyses. Staff members will conduct statistical analysis of claims data and online survey data to garner the perspective of workers. Administrative data will be scrutinized to determine the impact of SSAs on State fund and self-insured employers. …

Mildly Explosive Dynamics In U.S. Fixed Income Markets, Silvio Contessi, Pierangelo De Pace, Massimo Guidolin

Pomona Economics

We use a recently developed right-tail variation of the Augmented Dickey-Fuller unit root test to identify and date-stamp periods of mildly explosive behavior in the weekly time series of eight U.S. fixed income yield spreads between September 2002 and April 2018. We find statistically significant evidence of mildly explosive dynamics in six of these spreads, two of which are short/medium-term mortgage- related spreads. We show that the time intervals characterized by instability that we estimate from these yield spreads capture known episodes of financial and economic distress in the U.S. economy. Mild explosiveness migrates from short-term funding markets to medium- …

Best Performing Cities: Where America's Jobs Are Created And Sustained, Peter Grema, Caitlin Saladino, William E. Brown

Economic Development & Workforce

This Fact Sheet summarizes and expands upon the findings of the Milken Institute’s 2018 Best Performing Cities series report on the top 200 large cities and top 200 small cities in the United States in 2018. For the purposes of this Fact Sheet, the report focuses on 26 metropolitan areas located within the Mountain West region of the United States (Nevada, Arizona, Utah, Colorado, and New Mexico).

Brain Drain In The Mountain West, Ember Smith, Caitlin Saladino, William E. Brown

Economic Development & Workforce

This Fact Sheet highlights the effects of major shifts in geographic mobility patterns of highly-educated citizens in the Mountain West (Nevada, Utah, Arizona, New Mexico, and Colorado). The phenomenon, dubbed “brain drain” by experts, is characterized by the out-migration of a group of highly-educated people. “Brain gain” describes the opposite: when a location attracts highly-educated people. Several states are keeping and welcoming more highly-educated adults, while other states are rapidly losing talent. This migration pattern has important implications for social, political, and economic issues facing the country.

Reference-Dependent Preferences Among Nfl Fans: Evidence From Google Trends, Sunjae Lee

Undergraduate Economic Review

I look for evidence of reference-dependent preferences in the National Football League (NFL). Under reference-dependent preferences, sports fans should react more strongly to surprising wins and losses than expected wins or losses. I use Google Trends to look at the impact of NFL game outcomes on the use of positive or negative words on Google search. While search activity did respond to NFL games, I did not find that this response was sensitive to how surprising the outcome was, and so did not find evidence of reference-dependent preferences.

Trump’S False ‘Realism’, Muhammad Ali Baig, Syed Sabir Muhammad

International Bulletin of Political Psychology

Comment from IBPP Editor: One key challenge implicit in this article compromises interactions among formal political science definitions of realism and psychological constructions of realism, materialism, objectivism/subjectivism, empiricism, and idealism.

Authors' Abstract: Foreign policy pivoted upon realist principles has have remained a vital instrument to pursue, achieve, secure and sustain the policy objectives of a state. America being the liberal hegemonic state maintained ‘liberal hegemony’ since the end of the Second World War. Realists intended to adopt a realist foreign policy; however, ideologies like ‘American Exceptionalism’ dominated over the former. President Donald Trump opted for protectionism with the objective of …

Principles Of Microeconomics, Ernesto Garcia Iii

Open Educational Resources

No abstract provided.

Supply Shock Versus Demand Shock: The Local Effects Of New Housing In Low-Income Areas, Brian J. Asquith, Evan Mast, Davin Reed

Upjohn Institute Policy and Research Briefs

No abstract provided.

Restricted Probabilistic Fixed Ballot Rules And Hybrid Domains, Shurojit Chatterji, Souvik Roy, Soumyarup Sadhukhan, Arunava Sen, Huaxia Zeng

Research Collection School Of Economics

We study Random Social Choice Functions (or RSCFs) in a standard ordinal mech-anism design model. We introduce a new preference domain called a hybrid domain which includes as special cases as the complete domain and the single-peaked domain. We characterize the class of unanimous and strategy-proof RSCFs on these domains and refer to them as Restricted Probabilistic Fixed Ballot Rules (or RPFBRs). These RSCFs are not necessarily decomposable, i.e., cannot be written as a convex combina-tion of their deterministic counterparts. We identify a necessary and sufficient condition under which decomposability holds for anonymous RPFBRs. Finally, we provide an axiomatic justification …

Celebrating 25 Years Of The Nebraska Rural Poll, Rebecca J. Vogt

Cornhusker Economics

In 2020, the 25th annual Nebraska Rural Poll will arrive in mailboxes across the state. For 25 years, the Poll has examined many topics of concern to rural Nebraskans and accumulated a rich dataset for state and community leaders.

The Nebraska Rural Poll was first conducted by the University of Nebraska-Lincoln Department of Agricultural Economics in 1996 under the leadership of Dr. John Allen and Dr. Sam Cordes. Each year since, 7,000 surveys are mailed to randomly selected households located in the nonmetropolitan counties of the state. The goal of the poll is to give rural Nebraskans and their leaders …

50 Economic Facts And Figures About Kentucky, 2020, Michael Childress

CBER Infographic Posters

50 ECONOMIC FACTS AND FIGURES ABOUT KENTUCKY, 2020

Citizen-Consumers Wanted: Revitalizing The American Dream In The Face Of Economic Recessions, 1981-2012, Gokcen Coskuner-Balli

Business Faculty Articles and Research

This article brings sociological theory of governmentality to bear on a longitudinal analysis of American presidential speeches to theorize the formation of the citizen-consumer subject. The 40-year historical analysis which expands through four economic recessions and the presidential terms of Ronald Reagan, William J. Clinton, George W. Bush, and Barack Hussein Obama, illustrates the ways in which the national mythology of American Dream myth has been linked to the political ideology of the state to create the citizen-consumer subject in the United States. The quantitative and qualitative analysis of the data demonstrates first, the consistent emphasis on responsibility as a …

A Study On Impact Of Covid -19 On Msmes In India, Ayesha Siddiqua, Swathi J

International Review of Business and Economics

Small Industries are more vulnerable ones as it dealt a body blow because of Covid-19 and the resultant lockdown. It is difficult for them to survive without assistance. This is because, they are unable to cope up with the difficulties that are forced on them as their survival is difficult even in normal times but now they are dealing with something so unexpected. The significance of MSMEs sector in boosting Indian economy cannot be ignored. Unless we strengthen the MSME sector, it is very little that the economy will have to look forward to. They are reaching out to the …