One of the most controversial aspects of globalization is capital-market liberalization - not so much the liberalization of rules governing foreign direct inveestment, but those affecting short-term capital flows, speculative hot capital that can come into and out of the country. In the 1980s and 1990s, the IMF and the U.S.
In recent years there have been enormous changes in our technology, our economy, and our society. But has there been progress? From most economists the first reaction to this question is: Of course there must have been progress! After all, the growth of new technologies expands opportunity sets, what we can do, the amount of output per unit input. We can choose either to have more output, more goods and services, or to work less. However we make the choice, surely we are better off. But what, then, about the sweeping changes we associate with the phenomenon of globalization?
A strand of recent literature shows that a reform of import tariff (export tax) and consumption tax (production tax) that keeps consumer (producer) price unchanged enhances welfare and increases revenue under plausible conditions. It has been argued that the results provide an ex post justification for the widely implemented reform policies in developing countries that reduce trade taxes and increase consumption tax like VAT for revenue.
The research for which George Akerlof, Mike Spence, and I are being recognized is part of a larger research program which, today, embraces hundreds, perhaps thousands, of researchers around the world. In this lecture, I want to set the particular work which was sited within this broader agenda, and that agenda within the broader perspective of the history of economic thought. I hope to show that Information Economics represents a fundamental change in the prevailing paradigm within economices.
Tax evasion, by its very nature, is difficult to observe. We quantify the effects of tax rates on tax evasion by examining the relationship in China between the tariff schedule and the "evasion gap," which we define as the difference between Hong Kong's reported exports to China at the product level and China's reported imports from Hong Kong. Our results imply that a one-percentage-point increase in the tax rate is associated with a 3 percent increase in evasion.
The front-page corporate scandals that erupted in the U.S. economy beginning in 2001—Enron, WorldCom, Tyco, Adelphia, HealthSouth, and others—have undermined confidence in the U.S. business system and raised questions about the effectiveness of corporate governance in the United States.
This paper articulates and applies frameworks for examining whether consumption is excessive. We consider two criteria for the possible excessiveness (or insufficiency) of current consumption. One is an intertemporal utility-maximization criterion: actual current consumption is deemed excessive if it is higher than the level of current consumption on the consumption path that maximizes the present discounted value of utility. The other is a sustainability criterion, which requires that current consumption be consistent with non-declining living standards over time.
This paper provides an overview of the regulation of hedge funds and examines the key regulatory issues that now confront regulators throughout the world. In particular, two major issues are examined. First, whether hedge funds pose a systemic threat to the stability of financial markets, and if so, whether additional government regulation would be useful. And second, whether existing regulation provides sufficient protection for hedge fund investors, and, if not, what additional regulation is needed.
In the wake of the recent corporate scandals that have damaged investor confidence, policymakers, academics, and pundits have taken aim at accounting rules as one of the areas in need of reform. Proposals for changing the rules governing the accounting for the granting of stock options has become one of the most hotly contested areas. Advocates of reform argue that options are a form of compensation and that granting options entails real costs to stockholders. They argue that it follows that options should be included as an expense item in the firm's financial statements.