Cyclical effects of bank capital requirements with imperfect credit markets

This paper analyzes the cyclical effects of bank capital requirements in a simple model with credit market imperfections. Lending rates are set as a premium over the cost of borrowing from the central bank, with the premium itself depending on firms’ effective collateral. Basel I- and Basel II-type regulatory regimes are defined and a capital channel is introduced through a signaling effect of capital buffers on the cost of bank deposits. The macroeconomic effects of various shocks (a drop in output, an increase in the refinance rate, and a rise in the capital adequacy ratio) are analyzed, under both binding and nonbinding capital requirements. Factors affecting the procyclicality of each regime (defined in terms of the behavior of the risk premium) are also identified and policy implications are discussed.Banks&Banking Reform,Access to Finance,Economic Theory&Research,Currencies and Exchange Rates,Debt Markets

Capital Regulation, Monetary Policy and Financial Stability

This paper examines the roles of bank capital regulation and monetary policy in mitigating procyclicality and promoting macroeconomic and financial stability. The analysis is based on a dynamic stochastic model with imperfect credit markets. Macroeconomic (financial) stability is defined in terms of the volatility of nominal income (real house prices). Numerical experiments show that even if monetary policy can react strongly to inflation deviations from target, combining a credit-augmented interest rate rule and a Basel III-type countercyclical capital regulatory rule may be optimal for promoting overall economic stability. The greater the degree of interest rate smoothing, and the stronger the policymaker’s concern with macroeconomic stability, the larger is the sensitivity of the regulatory rule to credit growth gaps.

Relative returns to policy reform - evidence from controlled cross-country regressions

The authors aim at contributing to understand the dispersion of returns from policy reforms using cross-country regressions. The authors compare the"before reform"with"after reform"GDP growth outcome of countries that undertook import-liberalization and fiscal policy reforms. They survey a large sample (about 54) of developing countries over the period 1980-99. The benefits of openness to trade and fiscal prudence have been extensively identified in the growth literature, but the evidence from simple cross-section analysis can sometimes be inconclusive and remains vulnerable to criticism on estimation techniques, such as identification, endogeneity, multi-colinearity, and the quality of the data. The authors use a different analytical framework that establishes additional controls. First, they construct a counterfactual control group. These are countries that-under specific thresholds-did not introduce policy reforms under scrutiny. Second, the authors also try to use the most appropriate variable of policy reform, for example, exogenous changes in import-tariffs instead of the endogenous sum of all trade flows. Third, the authors try to base the before-after reform comparison on the most accurate date for the beginning of a policy reform period (instead of comparing averages over fixed intervals of time). Once these controls are set, they explain the difference between average GDP growth rates during the country-specific post and the pre-reform periods, relative to the average GDP growth of the relevant control group. The explanatory variables in the regressions include the standard growth-regression controls. The results are the following: 1) With a better measurement and timing of the policy reforms, the growth effect (the"returns on reform") is generally smaller than in previous papers. 2) There is evidence of contingent relationships between policy and growth, corresponding to the country's size, its export profile, and its governance. 2) Within the group of policy reformers, some countries have exhibited a relatively weaker growth response. Overall, the findings suggest that more accurate measurement and definition of the timing of reforms does not strengthen the significance of the effects of reforms on GDP growth. In fact, the effects are weaker than indicated in most cross-section studies. This suggests that the policy implications to be derived from these relationships should be treated with even more caution than previously thought.Environmental Economics&Policies,Trade Policy,Public Health Promotion,Economic Theory&Research,Health Monitoring&Evaluation,TF054105-DONOR FUNDED OPERATION ADMINISTRATION FEE INCOME AND EXPENSE ACCOUNT,Economic Theory&Research,Achieving Shared Growth,Environmental Economics&Policies,Trade and Regional Integration

Can the distributional impacts of macroeconomic shocks be predicted? A comparison of the performance of macro-micro models with historical data for Brazil

What was the impact of Brazil's 1998-99 currency crisis-which resulted in a change of exchange rate regime and a large real devaluation-on the occupational structure of the labor force and the distribution of incomes? Would it have been possible to predict such effects ahead of the crisis? The authors present an integrated macro-micro model of the Brazilian economy in 1998. The model consists of an applied general equilibrium macroeconometric component, connected through a set of linkage aggregate variables to a microeconomic model of household incomes. The authors use this framework to predict the employment and distributional consequences of the 1999 Brazilian currency crisis, based on 1998 household survey data. They then test the predictive performance of the model by comparing its simulated results with the actual household survey data observed in 1999. In addition to the fully integrated macro-micro model, the authors also test the performances of the microeconometric model on its own, and of a"representative household groups"approach. They find that the integrated macro-micro econometric model, while still inaccurate on many dimensions, can actually predict the broad pattern of the incidence of changes in household incomes across the distribution reasonably well, and much better than the alternative approaches. The authors conclude that further experimentation with these tools might be of considerable potential usefulness to policymakers.Labor Policies,Payment Systems&Infrastructure,Economic Theory&Research,Banks&Banking Reform,Environmental Economics&Policies,Economic Theory&Research,Environmental Economics&Policies,Macroeconomic Management,Inequality,Economic Stabilization

Capital requirements, risk-taking and welfare in a growing economy

From Springer Nature via Jisc Publications RouterHistory: accepted 2021-08-05, registration 2021-08-14, pub-electronic 2021-08-27, online 2021-08-27, pub-print 2021-12Publication status: PublishedAbstract: The effects of capital requirements on risk-taking and welfare are studied in an overlapping generations model of endogenous growth with banking, limited liability, and government guarantees. Capital producers face a choice between a safe technology and a risky, more productive but socially inefficient, technology. Bank risk-taking is endogenous. As a result of a skin in the game effect—motivated either as an aggregate externality, or as the outcome of the optimal choice of monitoring effort by individual banks—default risk is inversely related to the capital adequacy ratio. Numerical simulations show that in an equilibrium where banks extend both safe and risky loans, the skin in the game effect must be sufficiently strong for a welfare-maximizing regulatory policy to exist. These results remain qualitatively similar with endogenous monitoring costs and a strong effect of monitoring on entrepreneurial moral hazard. However, numerical experiments also suggest that the optimal capital adequacy ratio may be too high in practice and may require concomitantly a broadening of the perimeter of regulation and a strengthening of financial supervision to prevent disintermediation and distortions in financial markets

Inter- relação do tratamento ortodôntico com a doença periodontal.

The principle of orthodontic treatment according to the literature is based on mechanisms of induction of forces exerted on the teeth, generating a biological reaction in the tissues and around them, this cellular activity occurs at the alveolar bone level, with bone resorption and apposition. Orthodontic treatment in patients with periodontal disease; Inflammatory condition of the protection and insertion structures of the teeth, can bring gains to the periodontium, increasing the insertion of the periodontal ligament. The present work aims to relate the use of the Orthodontic device in patients who do not have a healthy periodontium, highlighting the benefits that a well-conducted treatment, with patient collaboration, can bring to the control of periodontal disease.O princípio do tratamento ortodôntico de acordo com a literatura baseia-se em mecanismos de indução de forças exercidas sobre os dentes, gerando uma reação biológica nos tecidos e ao redor deles, está atividade celular ocorre a nível ósseo alveolar, com reabsorção e aposição óssea. O tratamento ortodôntico em pacientes com doença periodontal; condição inflamatória das estruturas de proteção e inserção dos dentes, pode trazer ganhos ao periodonto, aumentando a inserção do ligamento periodontal. O presente trabalho tem como objetivo relacionar o uso do aparelho Ortodôntico em pacientes que não tem periodonto saudável, evidenciando os benefícios que o tratamento bem conduzido, com a colaboração do paciente pode acarretar para o controle da doença periodontal

Calcifying odontogenic cyst : a 26-year retrospective clinicopathological analysis and immunohistochemical study

Background: To identify the prevalence and clinicopathological profile of calcifying odontogenic cysts (COC) stored at an oral pathology service, and to analyze the immunoexpression of cyclooxygenase 2 (COX-2) and cyclin D1 (CD1) in these cysts. Material and Methods: After a retrospective analysis (1990-2016) carried out to identify cases of COC, a sample of 12 cases was selected for immunohistochemical analysis of COX-2 and CD1 by the immunoperoxidase technique. Protein expression was evaluated semiquantitatively by attributing a score of 0 to 3 (0 = no staining; 1 = 1-25%; 2 = 26-50%, and 3 = >51% immunopositive cells). Results: Twenty cases of COC were diagnosed over the study period. These cysts were more common in the posterior mandible and in men (male-to-female ratio of 1.2:1), with a mean age of 29.9 years. Among the 12 cases analyzed, immunoexpression of COX-2 was observed only in the inflammatory infiltrate in 50% of the cysts (n = 6). Protein CD1 was detected (score 1) in 66.6% of cases (n = 8), and COX-2 was negative in 50% (n = 6). Conclusions: The prevalence of COC among all odontogenic cysts was 3.5%, representing an uncommon lesion. Immunohistochemical analysis suggested that COX-2 does not participate in lesion progression. The cell proliferation index of COC was low, as demonstrated by the expression of CD1, suggesting a proliferative profile compatible with more indolent lesion

Global banking, financial spillovers and macroprudential policy coordination

The transmission of financial shocks and the gains from international macroprudential policy coordination are studied in a two-region, core–periphery model with a global bank, a two-level financial structure and imperfect financial integration. The model replicates the stylized facts associated with global banking shocks, with respect to output, credit, house prices and real exchange rate fluctuations in recipient countries, as documented empirically. Numerical experiments, based on a parametrized version of the model, show that the gains from coordination increase with the degree of financial integration, which raises the scope for spillback effects from the periphery to the core, through trade and private capital flows. However, even when coordination is Pareto-improving, the resulting gains may be highly asymmetric across regions

Cross-border regulatory spillovers and macroprudential policy coordination

We develop a core–periphery model with financial frictions and cross-border banking to assess the magnitude of regulatory spillovers and the gains from macroprudential policy coordination. A core global bank lends to its affiliates in the periphery and banks in both regions are subject to risk-sensitive capital regulation. Following an expansionary monetary policy in the core, a countercyclical response in capital requirements in that region induces the global bank to increase cross-border lending. We calculate welfare gains associated with countercyclical capital buffers under a range of policy regimes, including independent policymaking, full coordination, and reciprocity—a regime in which capital ratios set in the core are imposed on the global bank's affiliates abroad. One of our key results is that, even when regulatory spillovers are strong, reciprocity can make all parties better off if regulators attach a sufficient weight to financial stability considerations. With a standard, utility-based welfare criterion, reciprocity may also perform better than independent policymaking when regulatory spillovers are weak