This paper complements and extends an article by FELDER and SCHLEINIGER (FS) previously published in this journal. We show that the results of FS depend crucially on parameter values. Furthermore we perform simulations of optimal tax reforms in the context of the FS-framework, differentiating...

A central issue for macroeconomic policy is the optimal speed of disinflation. The cold turkey view states that a credible disinflation is less costly if it is quick. An alternative view is that gradualism is less costly because of frictions in wage and price setting. Institutional factors, such...

First it is shown that it is difficult to enforce the law using only the threat of punishment. Authorities need the willing, voluntary compliance of most citizens with most laws, most of the time. Second, such voluntary compliance is linked to judgments about the legitimacy of authorities and...

In this paper constant quality price indices are constructed for three categories of real estate in Geneva: apartment buildings, vacant land and condominiums. We use both the hedonic and repeat sales models to estimate the rate of price change on these three submarkets. For apartment buildings,...

I specify general criteria for models of bounded rationality and discuss specific models for satisficing inference. The task of these fast and frugal algorithms is to infer unknown features of their environment under the constraints of limited knowledge, limited time, and limited computational...

This paper provides econometric estimates of the determinants of Swiss outward FDI. Destination country statistics are pooled into a panel of FDI flows from Switzerland towards 12 OECD countries for 11 years (1982-1992). Results confirm expectations about the positive correlation between Swiss...

This study extends the work of SHELDON (1995) to banks outside of Switzerland. The results confirm the previous finding that capital-to-assets ratios are a poor guide to the soundness of a bank. This finding implies that capital adequacy rules that do not correctly reflect the risks that banks...

Barings and Daiwa were brought low by control failures in capital market operations in locations far from Head Office. This dramatically re-emphasized both the increased extent of globalisation of financial intermediaries, and the growing integration of (previously often separated) banking,...

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The paper discusses effort-aversion moral hazard in banks. When the evaluation and monitoring of loans requires private management effort, monitoring efforts are sensitive to the intensity of competition in the credit market. Equilibrium loan rates incorporate an oligopoly premium and a...