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This book surveys the law and policy of regulating information flows in capital markets. Part I begins with an overview of the themes, regulatory principles, and challenges that animate information policy, and describes the principal industry, self-regulatory, and regulatory bodies that participate in the governance of information flows in capital markets. Part I further surveys four categories of information in the information production chain: corporate disclosures, quotation and transaction information, information used in credit analysis, and benchmarks. The book discusses how each category of information is generated and used and the reasons why regulators seek to intervene in its production or use. It also provides a summary of the relevant framework for securities regulation in the United States, European Union, and other jurisdictions. Part II articulates several objectives of information policy in capital markets—ensuring transparency and access, promoting standardization and higher orders of meaning, and upholding integrity. This Part considers how regulatory aims differ by category and surveys alternative regulatory strategies, often with a view to replacing relatively inflexible regulatory frameworks with more flexible market mechanisms. Part III considers three specific challenges to capital markets regulation—automation, information overload or anxiety, and globalization—and how they affect the utility, integrity, and availability of information flows. This Part assesses the strategies by which policy makers have confronted these challenges, and offers some concluding thoughts on the implications of these phenomena for financial regulation and information policy.

Dynamic allocation and pricing problems appear in numerous frameworks such as the retail of seasonal/style goods, the allocation of fixed capacities in the travel and leisure industries (e.g., airlines, hotels, rental cars, holiday resorts), the allocation of a fixed inventory of equipment in a given period of time (e.g. equipment for medical procedures, bandwidth or advertising space in online applications), and the assignment of personnel to incoming tasks. Although dynamic pricing is a very old, modern Revenue Management (RM) techniques started with US Airline Deregulation Act of 1978. The basic RM issues are: 1) Quantity decisions: How to allocate capacity/output to different segments, products or channels? When to withhold products from the market? 2) Structural decisions: Which selling format to choose (posted prices, negotiations, auctions, etc..)? Which features to use for a particular format (segmentation, volume discounts, bundling, etc..)? 3) Pricing decisions: How to set posted prices, reserve prices? How to price differentiate? How to price over time? How to markdown over life time? Broadly speaking, all above questions deal in fact with issues treated in the Auction/Mechanism Design. Nevertheless, mechanism design has not been the tool of choice in RM: instead, most papers have focused on analyzing properties of restricted classes of allocation/pricing schemes. Recently, this challenge has been addressed by a more or less systematic body of work appearing under the heading of Dynamic Mechanism Design. This book illustrates some results of this strand of research, as reflected in the authors’ recent work.

With the advent of the 2007-2008 financial crisis, the economics profession itself entered into a crisis of legitimacy from which it has yet to emerge. Despite the obviousness of its failures, however, economists continue to rely on the same methods and to proceed from the same underlying assumptions. André Orléan challenges the neoclassical paradigm in this book, with a new way of thinking about its most fundamental concept, economic value. Orléan argues that value is not bound up with labor, or utility, or any other property that preexists market exchange. Economic value, he contends, is a social force whose vast sphere of influence, amounting to a kind of empire, extends to every aspect of economic life. Markets are based on the identification of value with money, and exchange value can only be regarded as a social institution. Financial markets, for example, instead of defining a neutral, objective value for securities, act as a mechanism for arriving at a reference price that will be accepted by all investors. What economists must therefore study is the hold that value has over individuals and how it shapes their perceptions and behavior. The MIT Press edition of this book, originally published in French, has been substantially revised and enlarged, with an entirely new section discussing the recent financial crisis.

This collective volume is about financial innovation, its history, and its potential to cause or to prevent financial crises. In assigning blame for the recent economic crisis, many have pointed to the proliferation of new, complex financial products - mortgage securitization in particular. The prominent economists from academia, policy institutions, and financial practice who contribute to this book, however, argue that it was not too much innovation but too little innovation and the lack of balance between debt-related products and asset-related products that lies behind the crisis. Prevention of future financial crises neither requires nor is assisted by regulation that stifles financial innovation, but by a policy and regulatory framework that helps broaden the informed use of financial innovation and its positive impact on the economy. The book, which includes two contributions from Robert Shiller as well as a discussion of Shiller's "MacroMarkets" tool, considers the key ingredients of financial innovation from both academia and industry; historical and recent examples of financial innovations; the positive potential but also the risks of financial innovation, with special emphasis on housing; rationality- and behavioral-based viewpoints on the causes of the recent crisis; the link between the cycle of financial innovation and financial crisis; and how future innovation-linked crises might be avoided.

The Great Recession shook not only the global economy and the financial systems of major economies, but also conventional wisdom of economic policy making, regulation of financial markets, and more. Following the collapse of Lehman Brothers in September 2008, governments and central banks acted on an unprecedented scope and scale. The policy response was unique in the variety of the measures taken, including some that had so far been almost unthinkable. Examples include unconventional monetary policy, interventions in financial markets, exchange rate intervention, and a renewed debate on capital controls. Preventive policies for reducing the risk of a crisis were also reconsidered, notably macroprudential policies, and stronger regulation of financial markets and institutions. The volume is policy oriented and presents the experience of various countries − advanced economies and emerging ones, countries that were hard-hit by the crisis and countries that weathered it successfully. The focus on central banks reflects the important role they played during the crisis, and the role that they might play in preventing or preparing for future crises. The chapters cover primarily monetary policy, macroprudential policy, and issues of exchange rates, capital flows, banking and financial markets as these relate to the crisis and its lessons. They also highlight the interactions among these dimensions, as the need for integration among policy areas is one of the important lessons of the crisis. This calls for closer cooperation and coordination between the various policy makers and regulators.

The severe fiscal problems that the United States faces have been the focus of much attention in recent years, and several groups have proposed ambitious plans for fiscal reforms that would address the deficit and debt problems facing the nation through various combinations of expenditure reductions and revenue-increasing tax reforms. The chapters in this book examine the pathways that tax and expenditure reform might take if the fiscal problems in the United States are to be successfully addressed. They focus on (1) reforms of entitlement programs, especially the fiscal problems caused by increasing health care costs and an aging population; (2) federal budgetary issues and processes, including an examination of the lessons that can be learned from the fiscal constraints imposed on the U.S. states, as well as an investigation of the problems that would arise in financing an ever-increasing U.S. national debt; and (3) reforms of the individual tax system, including limitations on various popular tax expenditures, and a wide range of corporate income tax reforms, including base-broadening, rate-reducing reforms modeled after the highly successful Tax Reform Act of 1986.

Leading scholars in economics, finance and law, along with regulators and practitioners, discuss Dodd-Frank and financial regulation. The origins of the Dodd-Frank Act in the financial crisis and the legislative process that produced it are described. Systemic risk and the problem of too-big-to-fail institutions are explained. Salient features of the Act, including new rules for mortgage origination and securitization, central clearing of derivatives, the Volcker Rule, the creation of the CFPB and the FSOC, the conflict minerals rule, and new rules for resolving troubled financial institutions are discussed. Participants question and debate the efficacy of Dodd-Frank features like the Volcker Rule, mandated swap clearing, the CFPB, and risk retention in securitization. The slow pace of rule writing is discussed and the difficulties in writing workable regulations from the legislative framework are described.

This book focuses on deep-tier risks, corporate social responsibility risks, cybersecurity risks, global raw material risks, long-term disruptions, business continuity planning, risk and disruption detection, and the potential for systemic disruptions. The interconnectedness of the global economy today means that unexpected events in one corner of the globe can ripple through the world’s supply chain and affect customers everywhere. For example, an earthquake and tsunami in Japan brought manufacturing around the globe to a standstill. State-of-the-art passenger jets are grounded because of a malfunctioning part. A strike halts shipments through a major port. A new digital device decimates the sales of other brands and sends established firms to the brink of bankruptcy. This book shows why modern vulnerabilities call for innovative processes and tools for creating and embedding corporate resilience and risk management. Through case studies, the book illustrates how companies have prepared for, coped with, and come out stronger following disruption—from the actions of Intel after the 2011 Japanese tsunami to the disruption in the “money supply chain” caused by the 2008 financial crisis. Supply chain risk management, the book reveals, is a balancing act between taking on the risks involved in new products, new markets, and new processes—all crucial for growth—and the resilience created by advanced risk management.

Despite its theoretical elegance and the substantial insights it has provided, the standard optimal tax model has significant limitations. This book argues that tax analysis must move beyond the emphasis on tax rates and bases to consider such aspects of taxation as administration, compliance, and remittance. This new tax-systems approach revisits the issue of remittance (who or what entity writes the check to cover tax liability); incorporates administrative and compliance costs; recognized a wide range of behavioral responses to tax rates; considers non-standard instruments such as who or what entity should remit taxes (employer or employee, retailer or consumer); incorporates administrative and compliance costs; recognizes a range of behavioral responses to taxation, including evasion and avoidance; considers non-standard policy instruments such as public disclosure of tax liability and tax enforcement strategies. These issues are taken up formally using the standard analytical tools of public economics, and illustrated with examples from tax policy issues around the world. The challenges for the empirical analysis of tax systems are considered and new approaches are proposed. Promising directions for future research are laid out.

The financial crisis has revealed many problems in the transparency and functioning of the financial sector. New debates on regulation and taxation of the financial sector have emerged as economists and policy makers were challenged to understand the sequence of events and the complex interactions between financial markets and the real economy-often not captured by economic models. This book opens a novel field of research by bringing together insights from public finance and banking, with the aim to better understand what had happened and how policy design of taxation and regulation could prevent a similar occurrence in the future.