Search results for: Author=Hellwig [244]

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2016
A Homeomorphism Theorem for the Universal Type Space with the Uniform Topology
2016/17
Max Planck Institute for Research on Collective Goods
Bonn
2016
Abstract
The paper proves a homeomorphism theorem for the universal type space with the uniform strategic topology or the uniform weak topology that Dekel et al. (2006) and Chen et al. (2010) introduced in order to take account of the fact that beliefs of arbitrarily high orders in agents' belief hierarchies can have a significant impact on strategic behaviour. Probability measures on the larger σ-algebras associated with these finer topologies are the completions of probability measures on the product σ-algebras, Kolmogorov's extension theorem can still be used to derive probability measures from belief hierarchies. The extended Kolmogorov mapping that is thus obtained is a homeomorphism.
Es droht eine neue Finanzkrise
Frankfurter Allgemeine Sonntagszeitung
44
2016
Neoliberale Sekte oder Wissenschaft? Zum Verhältnis von Grundlagenforschung und Politikanwendung in der Ökonomie
Den Diebstahl des Wohlstands verhindern
118-121
Springer
Berlin
2016
Robustly Coalition-Proof Incentive Mechanisms for Public Good Provision are Voting Mechanisms and Vice Versa
Review of Economic Studies
83
1440-1464
2016
“Total Assets” versus “Risk Weighted Assets”: Does it matter for MREL requirements?
2016/12
Max Planck Institute for Research on Collective Goods
Bonn
2016
Abstract
The paper discusses the role of risk weighting in the determination of minimum requirements for eligible bail-in-able liabilities of banks (MREL), i.e. liabilities that are not exempt from the bail-in tool in bank resolution and that can be written down or converted into equity if losses on assets exceed the available equity and such bailing-in is required to re-establish bank solvency so as to provide a basis for maintaining systemically important operations in resolution. The paper begins with a general discussion of the reasons for introducing bank resolution as a special procedure outside of insolvency law, of the reasons for having the bail-in tool and of the frictions that may stand in the way of successful and frictionless resolution. This discussion emphasizes the importance of having sufficient bail-in-able liabilities available; in contrast, for large institutions that have access to bond markets, the social costs of such requirements are small (unlike the private costs to the banks themselves). However, neither risk weighted nor total assets provide proper guidance for determining MREL. Risk-weighting suffers from a lack of a proper statistical basis and a certain manipulability. Moreover, the risk weighting that is used for capital regulation is not well suited for determining MREL; whereas capital regulation focuses on the probability of bad results, MREL is concerned with the extent of losses conditional on results being bad. “Total assets” suffer from not truly representing total assets because various rules, e.g. for netting, allow banks to keep certain assets and liabilities off their balance sheets.
Weniger Spielraum für Missbrauch
Frankfurter Allgemeine Zeitung
242
2016
2015
Der Vergleich hinkt: warum Hilfen in Griechenland nicht dasselbe sind wie in Zypern - eine Entgegnung auf Hans-Werner Sinn
Süddeutsche Zeitung
44
2015
Die EZB erpresst die Griechen
taz
10759
2015
Falsches Denken über die Geldpolitik
Die Volkswirtschaft
88
6
65
2015
Financial Stability and Monetary Policy
2015/10
Max Planck Institute for Research on Collective Goods
Bonn
2015
Abstract
The paper gives an overview over issues concerning the role of financial stability in monetary policy. Historically, financial stability has figured highly among central banks’ objectives, with policy measures ranging from interest rate stabilization to serving as a lender of the last resort. With the ascent of macroeconomics, these traditional tasks of central banks have been displaced by macroeconomic objectives, price stability, full employment, growth. The financial crisis has shifted the focus back to financial stability concerns. Along with these developments, the shift from a specie standard to a pure fiat money system has widened the scope for central bank policies, which are no longer constrained by legal obligations attached to central bank money. The paper first surveys the evolution of financial-stability and macroeconomic-stability concerns in central banking and monetary policy. Then it discusses two major challenges: (i) What should be done to assess the relevance of financial stability concerns in any given situation? How should one deal with the fact that systemic interdependence takes multiple forms and is changing all the time and that many contagion risks cannot be measured? (ii) What is the relation between financial-stability and macroeconomic-stability objectives? To what extent do they coincide, to what extent are they in conflict? How should tradeoffs be handled and what can be done to reduce the risk of the central bank’s succumbing to financial dominance?