This paper is the second of two parts of a general theory of regulation. An effective regulatory system, whether created by a public legislative body or by private charter, must be coherent if it is to be successful. Coherence is a ‘property’ of well-designed regulatory systems. We suggest...

The recent global financial turmoil and economic recession have exposed the serious shortcomings of the current U.S. regulations for over-the-counter (OTC) derivatives. Drawing upon the arbitrage economic theory and the spirit of the U.S. Food and Drug Administration model, we propose a model...

In the wake of the events of September 2008, money market mutual funds have made significant changes to the way they invest. Those changes have been driven by business and investment needs as well as by substantial revisions to the regulatory framework in which funds operate. Yet, some...

Regulation scholars have long searched for the best tools to use to achieve public policy goals, generating an extensive body of research on what has become known as instrument choice. By contrast, analysis of options for structuring how officials make regulatory decisions – process choice –...

This brief is actually going to have two levels. One level will go with the advertised title, and I’ll tell you my current views on the truth about moral hazard and adverse selection. Adverse selection will serve as somewhat of a handmaid of moral hazard, as you will see. That’s one level....

Through the Troubled Assets Relief Program (TARP) bailout, the government took a controlling interest in a number of companies that remain publicly traded. There is significant prior debate over the consequences of government control of private-sector resources, but the present dynamic of...

This paper analyzes prudential controls on capital flows to emerging markets from the perspective of a Pigouvian tax that addresses externalities associated with the deleveraging cycle. It presents a model in which restricting capital inflows during boom times reduces the potential outflows...

Until recently, the trend in world capital markets has been toward increasing "globalization." Recent events in Latin America and Asia have forced a rethinking of the desirability of unrestricted world capital flows. In this paper we ask whether simple restrictions on capital mobility can...