45 research outputs found
Divisions of Regulatory Labor, Institutional Closure, and Structural Secrecy in New Regulatory States: The Case of Neglected Liquidity Risks in MarketâBased Banking
Monetary policy and financial regulation have been regarded one of the paradigmatic domains where states can reap the benefits of delegating clearly delineated and unequivocal policy tasks to specialized technocrats. This article discusses the negative sideâeffects and unintended consequences of particular ways to partition such tasks. The separation between monetary policy formulation, central banks' money market management, and financial supervision has weakened policy makers' capacities to address risks associated with banks' active liability management and to mitigate proâcyclical dynamics in money markets. These adverse effects derive from the neglect of liquidity as a regulatory problem in formal task descriptions; from the obstacles to positive coordination between specialized technocrats in the selfâcontained domains of monetary policy formulation, implementation, and prudential regulation; and from a dissociation between formal responsibilities, which lie with regulators, and the resources residing in money market divisions â market expertise and influence over counterparties â that are critical to influence bank behavior. I explore these mechanisms with an inâdepth case study of British monetary and financial governance between 1970 and 2007. I posit that we can generalize the respective mechanisms to explore unintended effects of âagencificationâ and to contribute to a broader reâassessment of those organizing principles that have guided the construction of ânew regulatory statesâ.1 Introduction 2 The return of liquidity risks with a vengeance 3 Rethinking the disentanglement of financial regulation from monetary policy: The unintended consequences of "agencification" 4 Case selection and methods 5 The emergence of financial regulatory state in Britain and its failure to regulate liquidity 6 Discussion and conclusion List with interviewees Acknowledgements Reference
Formal Institution Building in Financialized Capitalism: The Case of Repo Markets
Money markets are at the heart of financialized capitalism, as those markets that provide the funding liquidity needed for credit creation and leveraged trading. How have these markets evolved, grown, and become critical for larger financial flows? To answer this question, I distinguish an early period of financial globalization marked by regulatory arbitrage, offshoring, deregulation, and informal trading practices from a period of regime-consolidation marked by formal institutionalization. Concentrating on repo markets as the key funding sources for market-based banking, I demonstrate that new institutional arrangements for these markets were initiated by private sector associations, but supported and authorized by public authorities. Bond trader groups codified new contractual arrangements and these were validated via reforms of bankruptcy codes and changes in central banksâ policy frameworks in the United States and European Union. Through these modifications and re-articulations in institutional conditions, transactions and large exposures on money markets became routine affairsâfor shadow banking actors like money market funds as well as for commercial banks. The article concludes by discussing the continuity of regime-consolidation efforts after the transatlantic financial crisis and hypothesizes that they reveal âneopatrimonialâ features.Introduction Money market expansion during the liberalization-phase of financial globalization How repo became a highly institutionalized segment of the money markets âSecured moneyâ in a market-based system Repo and the development of market-based banking Discussion and conclusion Notes References Acknowledgement
Capitalization and its Legal Friends
Katharina Pistorâs argument in The Code of Capital about the constitutive role of legal practice for the creation and distribution of wealth requires contextualization; her claims about the stand-alone role of law in determining the political economy of global capitalism are exaggerated. My first intervention concerns the concept of capital. Capital evidently is not just a legal code, but also constitutes a financial accounting entity that emerges from processes of investment, which are embedded in (economic, social, political) structures that are facilitative of unequal distributions of rewards and risks. Legal coding should be considered as part of such âcapitalizationâ and as becoming more critical in the contemporary economy, in which capitalization increasingly happens through financial engineering and through capturing rents fromâintangible capitalâ. Secondly, we can only understand the distributional implications of legal coding if we recognize a) the importance of rent-seeking in secularly stagnating economies and b) the particular class configurations in what Milanovic, B. (2019).Capitalism, alone. Cambridge, MA: HarvardUniversity Press callsâliberal meritocratic capitalismâ. The consolidation of a capital-richandhard-working upper class in such a capitalist formation (the extreme case being United States) not just indicates a close alliance or overlap between holders of wealth and the professions (fund managers, legal advisers etc.) that serve them. It also indicates that social class structuresâthe paths of socialization they reproduce; their in-built social sorting mechanisms; their close association with ideologies of legitimate privilegeâplay a key role in reproducing economic distributional outcomes.1 What is Capital? 2 Legal Coding and Class Structures 3 Practices of Capita
How Central Bankers Learned to Love Financialization: The Fed, the Bank, and the Enlisting of Unfettered Markets in the Conduct of Monetary Policy
Central banksâ role in financialization has received increasing attention in recent years. These debates have predominantly revolved around authoritiesâ âbenign neglectâ of asset bubbles, their deregulatory policies, and the safety nets they provide for speculative exuberance. Most analyses refer to the dominance of pro-market interests and ideas to explain these actions. The present article moves beyond these accounts by showing how an alignment between techniques of monetary governance and âunfetteredâ financial markets can explain central banksâ endorsement of increasingly fragile structures of liquidity and their strategic ignorance towards growing amounts of debt. We analyze the processes of abstraction and formalization by which the âprogrammesâ and âtechnologiesâ of monetary governance have been made compatible with the texture of contemporary finance; and we show how central banksâ attempts to make markets more amenable to their methods of policy implementation shaped new conduits for financial growth. As empirical cases, we discuss the Federal Reserveâs experiments with different policy frameworks in the 1980s and the Bank of Englandâs twisted path to inflation targeting from 1979 to 1997. These cases allow us to demonstrate that the infrastructural power of contemporary central banking is predicated on the same institutional foundations that have made financialization possible
The Constrained Politics of Local Public Investments under Cooperative Federalism
Public investment spending declined steadily in advanced economies during the last three decades. Germany is a case in point where the aggregate decline coincided with growing inequality in investments across districts. What explains variation in local investment spending? We assembled a novel dataset to investigate the effects of structural constraints and partisanship on German districtsâ investment spending from 1995 to 2018. We find that the lack of fiscal and administrative capacity significantly influences local investment patterns. Yet, within these constraints, partisanship matters. Conservative politicians tend to prioritize public investment more than the left. This is especially the case when revenues from local taxes are low. As the fiscal conditions improve, left-wing politicians increase investment more strongly and hence the difference between the left and the right disappears. Our findings are indicative of how regional economic divergence can emerge even within cooperative federalist systems and show that, despite rigid fiscal rules, partisanship matters when parties face trade-offs over discretionary spending.Ăber die vergangenen Jahrzehnte sind öffentliche Investitionen in IndustrielĂ€ndern deutlich zurĂŒckgegangen. Dies ist auch in Deutschland zu beobachten, wo der RĂŒckgang mit wachsenden Ungleichheiten zwischen Kreisen einherging. Dieser Beitrag untersucht diese interregionalen Diskrepanzen von öffentlichen Investitionen in Deutschland. Zu diesem Zweck nutzen wir einen neuen Datensatz, der strukturelle Bedingungen sowie parteipolitische Aspekte erfasst, die InvestitionstĂ€tigkeit auf der Kreisebene zwischen 1995 und 2018 beeinflusst haben. Wir zeigen, dass Finanzprobleme sowie fehlendes technisches Personal die InvestitionstĂ€tigkeit maĂgeblich beschrĂ€nkt haben. Gleichzeitig setzen unterschiedliche lokale Parteien in Anbetracht solcher strukturellen BeschrĂ€nkungen unterschiedliche PrioritĂ€ten in ihren freiwilligen Ausgaben. Konservative BĂŒrgermeister und LandrĂ€te tendieren dazu, öffentliche Investitionen mehr zu priorisieren als linke Politiker. Dies ist vor allem der Fall, wenn die Einnahmen aus Gewerbesteuern gering sind. Wenn die Einnahmen steigen, erhöhen linke Politiker ihre Ausgaben fĂŒr öffentliche Investitionen allerdings stĂ€rker als rechte Politiker, sodass der Unterschied verschwindet. Diese Resultate indizieren, dass regionale Ungleichheiten in öffentlichen Investitionen sogar in kooperativen föderalen Systemen auftreten können und zeigen, wie Parteipolitik lokale Ausgabenentscheidungen selbst dann beeinflusst, wenn lokale EntscheidungstrĂ€ger unter rigiden Regeln operieren.Contents 1 Introduction 2 Germanyâs divergent local investments and the political economy of local public finances 3 Constrained partisanship: The politics of public investments in a multi-level polity Fiscal and administrative constraints for local public investments Local partisanship, voluntary spending priorities, and responsiveness to different constraints 4 Data and methodology Data Independent and dependent variables Methods 5 Empirical results The constraining effects of Germanyâs semi-sovereign state on local public investments The constrained partisanship of investment spending 6 Concluding discussion Reference
The Constrained Politics of Local Public Investment Under Cooperative Federalism
Public investment spending declined steadily in advanced economies during the last three decades. Germany is a case in point where the aggregate decline coincided with growing inequality in investments across districts. What explains the variation in local investment spending? We assembled a novel data set to investigate the effects of structural constraints and partisanship on German districtsâ investment spending from 1995 to 2018. We find that the lack of fiscal and administrative capacity significantly influences local investment patterns. Yet, within these constraints, partisanship matters. Conservative politicians tend to prioritize public investment more than the left. This is especially the case when revenues from local taxes are low. As the fiscal conditions improve, left-wing politicians increase investment more strongly and hence the difference between the left and the right disappears. Our findings are indicative of how regional economic divergence can emerge even within cooperative federal systems and show that, even when decision-makers operate under various institutional and structural constraints, partisanship matters for how these actors allocate discretionary spending.1. Introduction 2. Germanyâs divergent patterns of local public investment and the political economy of subnational fiscal policymaking 3. Structural constraints and partisan choices: public investment in a multilevel polity 4. Data and methodology 5. Empirical results 6. Concluding discussion Footnotes Acknowledgments Supplementary material Reference
"Köln ist relativ reich": Interview
Die Kommunen mĂŒssen nach Corona investieren, meint Leon WansÂleben vom Max-Planck-Institut fĂŒr GesellÂschaftsÂforschung
The short-time Dynamics of the Critical Potts Model
The universal behaviour of the short-time dynamics of the three state Potts
model in two dimensions at criticality is investigated with Monte Carlo
methods. The initial increase of the order is observed. The new dynamic
exponent as well as exponent and are determined. The
measurements are carried out in the very beginning of the time evolution. The
spatial correlation length is found to be very short compared with the lattice
size.Comment: 6 pages, 3 figure
The short-time behaviour of a kinetic Ashkin-Teller model on the critical line
We simulate the kinetic Ashkin-Teller model with both ordered and disordered
initial states, evolving in contact with a heat-bath at the critical
temperature. The power law scaling behaviour for the magnetic order and
electric order are observed in the early time stage. The values of the critical
exponent vary along the critical line. Another dynamical exponent
is also obtained in the process.Comment: 14 pages LaTeX with 4 figures in postscrip