For decades credit rating agencies were viewed as trusted arbiters of creditworthiness and their ratings as important tools for managing risk. The common narrative is that the value of ratings was ...compromised by the evolution of the industry to a form where issuers pay for ratings. In this paper we consider both an investor-pays and an issuer-pays set-ups and show that if the investor-pays version can overcome the free-rider problem it is efficient, and otherwise leads to under-provision of information; while if the issuer-pays can force disclosure, it is efficient, but otherwise it leads to less revealing information because of the systematic distortion in revealed information along with over-investment in information. We show that in both these arrangements credit ratings have value in equilibrium and how reputation insures that, in equilibrium, ratings will reflect sound assessments of credit worthiness. We argue that regulatory reliance on ratings and the increasing importance of risk-weighted capital in prudential regulation have more likely contributed to distorted ratings than the matter of who pays for them.
Financial Markets and Firm Dynamics Cooley, Thomas F.; Quadrini, Vincenzo
The American economic review,
12/2001, Letnik:
91, Številka:
5
Journal Article
Recenzirano
Odprti dostop
Recent studies have shown that the dynamics of firms (growth, job reallocation, and exit) are negatively correlated with the initial size of the firm and its age. In this paper we analyze whether ...financial factors, in addition to technological differences, are important in generating these dynamics. We introduce financial-market frictions in a basic model of industry dynamics with persistent shocks and show that the combination of persistent shocks and financial frictions can account for the simultaneous dependence of firm dynamics on size (once we control for age) and on age (once we control for size).
Arterial thrombosis is the main underlying mechanism of acute atherothrombosis. Combined antiplatelet and anticoagulant regimens prevent thrombosis but increase bleeding rates. Mast cell-derived ...heparin proteoglycans have local antithrombotic properties, and their semisynthetic dual AntiPlatelet and AntiCoagulant (APAC) mimetic may provide a new efficacious and safe tool for arterial thrombosis. We investigated the in vivo impact of intravenous APAC (0.3–0.5 mg/kg; doses chosen according to pharmacokinetic studies) in two mouse models of arterial thrombosis and the in vitro actions in mouse platelets and plasma.
Platelet function and coagulation were studied with light transmission aggregometry and clotting times. Carotid arterial thrombosis was induced either by photochemical injury or surgically exposing vascular collagen after infusion of APAC, UFH or vehicle. Time to occlusion, targeting of APAC to the vascular injury site and platelet deposition on these sites were assessed by intra-vital imaging. Tissue factor activity (TF) of the carotid artery and in plasma was captured.
APAC inhibited platelet responsiveness to agonist stimulation (collagen and ADP) and prolonged APTT and thrombin time. After photochemical carotid injury, APAC-treatment prolonged times to occlusion in comparison with UFH or vehicle, and decreased TF both in carotid lysates and plasma. Upon binding from circulation to vascular collagen-exposing injury sites, APAC reduced the in situ platelet deposition.
Intravenous APAC targets arterial injury sites to exert local dual antiplatelet and anticoagulant actions and attenuates thrombosis upon carotid injuries in mice. Systemic APAC provides local efficacy, highlighting APAC as a novel antithrombotic to reduce cardiovascular complications.
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•APAC is an antiplatelet agent and inhibits platelet aggregation to collagen and ADP in mice.•APAC is an anticoagulant and prolongs coagulation times in plasma.•Intravenous APAC decreases platelet-driven thrombi by targeting to arterial injury sites.•APAC decreases circulating and vascular tissue factor activity after arterial injury.•Systemic APAC acts as a local antithrombotic to reduce cardiovascular complications at injury sites.
Regulating Wall Street Acharya, Viral V; Cooley, Thomas F; Richardson, Matthew P ...
2010, 2010-10-28, c2011, Letnik:
608
eBook
'Regulating Wall Street' assesses the strengths and weaknesses of new regulations in response to the recent global financial crisis. It summarises key issues that regulatory reform should address, ...evaluates the key components of regulatory reform and provides analysis of how the reforms will affect financial firms and markets.
We study the welfare implications of uncertainty in business cycle models. In the modern business cycle literature, multiplicative real shocks to production and/or preferences play an important role ...as the impulses that produce aggregate fluctuations. Introducing shocks in this way has the implication that fluctuating economies may enjoy higher welfare than their steady state counterparts. This occurs because purposeful agents make use of uncertainty in their favor. The result holds for a range of reasonable parameter values and in various models considered in the business cycle literature. One notable implication is that the welfare cost estimates which have been obtained in the literature using only consumption series may be biased and possibly seriously.
•The welfare implications of business cycle models with multiplicative shocks to production and/or preferences are studied.•Fluctuating economies enjoy higher welfare than their steady state counterparts.•The welfare cost estimates measured by consumption series alone may be biased.
The demographic deficit Cooley, Thomas; Henriksen, Espen
Journal of monetary economics,
January 2018, 2018-01-00, Letnik:
93
Journal Article
Recenzirano
There has been a slowdown in growth in the world’s most advanced economies. In this paper we argue that changing demographics, in particular aging populations combined with increased life expectancy, ...may be part of the explanation for why we observe slower growth, falling interest rates and falling productivity growth. Using Japan and the U.S. in the years prior to the financial crises as a case study, we provide estimates of the growth deficit that arises from an aging cohort structure and increasing life expectancy. We also provide projections of the impact of predictable demographic changes on future growth in the U.S. and Japan.
We study the social, demographic and economic origins of social security. The data for the U.S. and for a cross section of countries suggest that urbanization and industrialization are associated ...with the rise of social insurance. We describe an OLG model in which demographics, technology, and social security are linked together in a political economy equilibrium. In the model economy, there are two locations (sectors), the farm (agricultural) and the city (industrial) and the decision to migrate from rural to urban locations is endogenous and linked to productivity differences between the two locations and survival probabilities. Farmers rely on land inheritance for their old age and do not support a payas-you-go social security system. With structural change, people migrate to the city, the land loses its importance and support for social security arises. We show that a calibrated version of this economy, where social security taxes are determined by majority voting, is consistent with the historical transformation in the United States.
We show that a change in organizational structure from partnerships to public companies—which weakens contractual commitment—can lead to higher investment in high return-and-risk activities, higher ...productivity (value added per employee) and greater income dispersion (inequality). These predictions are consistent with the observed evolution of the financial sector where the switch from partnerships to public companies has been especially important in the decades that preceded the 21st Century financial crisis.
We Construct a general equilibrium model in which a pay‐as‐you‐go social security system can be adopted and sustained as a political and economic equilibrium. We alalyze the welfare implictions of ...this system and compare general equilibrium welfare measure to the commonly used notion of actuarial fairness.
In this paper we develop a general equilibrium model with heterogeneous, long-lived firms where financial factors play an important role in their production and investment decisions. When the economy ...is hit by monetary shocks, the response of small and large firms differs substantially, with small firms responding more than big firms. As a result of the financial decisions of firms, monetary shocks have a persistent impact on output. Another finding of the paper is that monetary shocks lead to considerable volatility in stock market returns.
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