asset price inflation
Tobias Knedlik, A. Knorr
Systeme monetärer Steuerung - Analyse und Vergleich geldpolitischer Strategien - Schriften zu Ordnungsfragen der Wirtschaft, Band 86,
No. 86,
2007
Abstract
Most of the influential central banks managed to bring inflation down to a sustainable path in the last two decades. However, during the same time asset prices increased significantly. From the perspective of economic policy, this development might constitute a problem in the case that price increases are not due to changes in fundamentals but are of a speculative nature. During the current past the number of asset price bubbles increased. The aim of this contribution is to analyze policy options with regard to asset price inflation. We identify the relevant markets, discuss their specific price mechanisms, discuss transmission mechanisms, and the usefulness of monetary policy and alternative instruments to deal with asset price inflation. We show that, once asset price inflation is present, monetary policy can do little to stop processes of speculative bubbles. It is the more important that that alternatives are considered. These include the analysis of monetary conditions, a straight forward communication, better regulation, and a strengthening of institutions that allow for diversifying risks to handle the necessary structural changes with lowest possible economic costs.
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Requirements on Regulation Frameworks: What is the Best Way of Securing Efficiency in the Water Sector?
Peter Haug
Competition Policy in Network Industries, INFER Research Perspectives, Vol. 3,
2007
Abstract
The paper investigates the effects of several characteristics of regulatory frameworks in the water sector on the efficiency of water provision. Several requirements on efficient regulatory frameworks suggested in other studies of network industries are modified and others are derived from different economic theories of regulation. The resulting set of criteria is applied to the regulation systems of the Dutch, German and US-American water industry. A comparison of several performance indicators for the three countries suggests that some relationship between the design of regulatory frameworks and the price-quality-ratios in the water sector might exist.
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Developing Collaborative Advantage: Preconditions and Restrictions for ‘Knowledge City’ Strategies in East Germany
Peter Franz
Institutions for Knowledge Generation and Knowledge Flows - Building Innovative Capabilities for Regions. Papers presented at the 10th Uddevalla Symposium 2007,
2007
Abstract
The trend of cities, serving as a location for universities and research institutes, to take into consideration new strategies utilizing this location factor for growth-oriented urban development can also be observed in Germany. An overview of the quantitative preconditions shows that many German cities dispose of favorite preconditions for such a knowledge city strategy. An analysis of the policy arena comes to the result that the political actors are confronted with the task of a complex multi-level-policy where networking skills become essential. A comparison with the policy conditions in the U.S. makes it quite clear that especially the German universities have the status of semi-autonomous actors complicating negotiating and coordinating activities between city and science representatives. First examples of deregulation show that these hurdles can be overcome in the future.
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Bank Lending, Bank Capital Regulation and Efficiency of Corporate Foreign Investment
Diemo Dietrich, Achim Hauck
IWH Discussion Papers,
No. 4,
2007
Abstract
In this paper we study interdependencies between corporate foreign investment and the capital structure of banks. By committing to invest predominantly at home, firms can reduce the credit default risk of their lending banks. Therefore, banks can refinance loans to a larger extent through deposits thereby reducing firms’ effective financing costs. Firms thus have an incentive to allocate resources inefficiently as they then save on financing costs. We argue that imposing minimum capital adequacy for banks can eliminate this incentive by putting a lower bound on financing costs. However, the Basel II framework is shown to miss this potential.
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Banks’ Internationalization Strategies: The Role of Bank Capital Regulation
Diemo Dietrich, Uwe Vollmer
IWH Discussion Papers,
No. 18,
2006
Abstract
This paper studies how capital requirements influence a bank’s mode of entry into foreign financial markets. We develop a model of an internationally operating bank that creates and allocates liquidity across countries and argue that the advantage of multinational banking over offering cross-border financial services depends on the benefit and the cost of intimacy with local markets. The benefit is that it allows to create more liquidity. The cost is that it causes inefficiencies in internal capital markets, on which a multinational bank relies to allocate liquidity across countries. Capital requirements affect this trade-off by influencing the degree of inefficiency in internal capital markets.
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Knowledge-Based Economy and Urban Development in Germany
Peter Franz
Die anderen Städte. IBA Stadtumbau 2010 - The other Cities, Bd. 4: Profilierung von Städten - Urban Distinctiveness, Berlin (Jovis) (Edition Bauhaus, Bd. Nr. 22),
2006
Abstract
The article examines the response of the German university system to an increasingly knowledge-based economy in comparison to the US. Additionally the potential role of universities in urban development is analysed. Several indicators show that several regulations of the German university system have to be changed for adapting it to the requirements of a knowledge-based economy.
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Obesity, voracity, and short stature: the impact of glutamate on the regulation of appetite.
M. Hermanussen, A.P. García, Marco Sunder, M. Voigt, V. Salazar, J. A. F. Tresguerres
European Journal of Clinical Nutrition 60 (1),
2006
Abstract
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Network investment and the threat of regulation: avoiding monopoly or infrastructure extension
Christian Growitsch, Niels Krap
Wirtschaft im Wandel,
No. 5,
2006
Abstract
In summer 2005, Deutsche Telekom announced its plans for the buildup of a new fiber glass network. At the same time, it formulated the condition that this network was not to be regulated concerning pricing or use by other providers (network access). In order to make this investment possible, in its coalition treaty the big coalition agreed to exclude the new network from the ex-ante regulation and to include this freedom from regulation in the telecommunication law. The question is now how investments can be facilitated and, at the same time, welfare losses through monopoly gains can be avoided. Applying game theory, it can be shown that a regulation authority like the ‘Bundesnetzagentur’, which is responsible for German telecommunication sector, should signal an increasing tolerance for deviations from its calculated and determined regulatory price in the face of increasing uncertainty concerning expected cost and returns. Thus, the threat of regulation alone leads to tolerable prices, without the actual regulation taking place. In the future, the ‘Bundesnetzagentur’ should reduce information asymmetries and the optimal level of tolerance in order to achieve a more precise intervention price and a more effective threat of regulation. The effectiveness of such a threat decreases if the legislation prevents the regulation authority from using this instrument by law. Against this background, the recent Federal Government resolution from March 17th 2006 noveling the telecommunication law heads for the economically right direction but it has to prove its incentive compatibility in the daily legal practice.
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Network Investment and the Threat of Regulation – Preventing Monopoly Exploitation or Infrastructure Construction?
Ulrich Blum, Christian Growitsch, Niels Krap
IWH Discussion Papers,
No. 7,
2006
Abstract
In summer 2005, the German telecommunication incumbent Deutsche Telekom announced its plans to build a new broadband fibre optics network. Deutsche Telekom decided as precondition for this new network not to be regulated with respect to pricing and third party access. To develop a regulator's strategy that allows investments and prevents monopolistic prices at the same time, we model an incumbent's decision problem under a threat of regulation in a game-theoretical context. The decision whether to invest or not depends on the probability of regulation and its assumed impact on investment returns. Depending on the incumbent's expectation on these parameters, he will decide if the investment is favourable, and which price to best set. This price is below a non-regulated profit maximising price, since the incumbent tries to circumvent regulation. Thus, we show that the mere threat of a regulator's intervention might prevent supernormal profits without actual price regulation. The regulator, on the other hand, can influence both investment decision and the incumbent's price via his signals on regulation probability and price. These signals an be considered optimal, if they simultaneously allow investment and minimize the incumbent's price.
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Essays on Network Regulation – Theoretical and Empirical Evidence from the Electricity Supply Industry
Christian Growitsch
Schriften des IWH,
No. 21,
2005
Abstract
Mit dem Etablieren des gemeinsamen Europäischen Binnenmarktes im Laufe der 80er und 90er Jahre des vergangenen Jahrhunderts und dem damit verbundenen Wegfall von Handelsbarrieren und anderen Wettbewerbshemmnissen rückte die Liberalisierung sogenannter Netzindustrien in den Fokus der Europäischen Politik. Die Deregulierung solcher Sektoren mit physischer Netzinfrastruktur, insbesondere der Märkte für Strom, Gas, Telekommunikation und Schienenverkehr wurde zu einem wesentlichen Aspekt des Ziels der Förderung von Wettbewerb in der Europäischen Ökonomie. Die Einführung wettbewerblicher Strukturen in die ehemalig monopolistischen Netzindustrien bedingte die Notwendigkeit wettbewerbspolitischer Reformen auf nationaler und Europäischer Ebene. Insbesondere die Sicherstellung gleicher Wettbewerbsbedingungen und der Schutz der Verbraucher vor Marktmachtmißbrauch durch die etablierten Anbieter rückte in den Fokus der Wirtschaftspolitik und führte zum Aufbau sektorspezifischer Regulierungsregime. Diese unterscheiden sich deutlich sowohl sektoral wie im Hinblick auf nationale Ordnungsrahmen hinsichtlich ihrer Rahmenbedingungen, ihrer Methoden, ihrer Struktur und ihrer ökonomischen Wirkung. Der Austausch und die Übertragung von Erkenntnissen und Erfahrungen und die kontinuierliche Verbesserung bestehender institutioneller Arrangements sollte daher ein bedeutender Aspekt ökonomischer Forschung und staatlicher Wirtschaftspolitik sein. Die hier vorliegende Sammlung energieökonomischer Aufsätze zielt auf eben jenen Erkenntnistransfer ab. Dazu wird in den ersten beiden Artikeln ein spezifisches Regulierungsregime, der sogenannte verhandelte Netzzugang, und die damit verbundenen Erfahrungen aus dem deutschen Elektrizitätsmarkt vorgestellt. Ein dritter Aufsatz beschäftigt sich mit der Versorgungsqualität in Netzsektoren am Beispiel lokaler Stromverteilnetzbetreiber in einem europäischen Vergleich.
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