1,721,291 research outputs found
The Economics of Crime and Money Laundering: Does Anti-Money Laundering Policy Reduce Crime?
No full textAnti-money laundering policy has become a major issue in the Western world, especially in the United States after 9-11. Basically all countries in the world are more or less forced to cooperate in the global fight against money laundering. In this paper, the criminalization of money laundering is modelled, assuming rational behaviour of criminals, following the law and economics strand of the literature which is described as the economics of crime. The theoretical model shows that a) the probability to be caught for money laundering, b) the sentence for money laundering, c) the probability to be convicted for the predicate crime and d) the transaction costs of money laundering are negatively related to the amount of crime. Under the assumption that these factors are all positively influenced by a stricter anti-money laundering policy, the hypothesis empirically tested in this paper is that anti-money laundering policy deters potential criminals from illegal behavior and therefore lowers the crime rate. Since the data on anti-money laundering policy, used in the literature so far, is not all-embracing, a new unique indicator is constructed by using all the information from the mutual evaluation reports on money laundering of the FATF, IMF and World Bank. This unique dataset is used in an empirical estimation based on a Mundlak specification to test the effect of antimoney laundering policy on the crime rate. Among the four policy areas measured – the role of laws, the institutional framework, the duties of the private sector in law enforcement, and international cooperation, the latter turned out to be the most important policy area for reducing crime. This should be an extra incentive for countries and international organizations to continue their efforts to promote and develop international cooperation in the fight against money laundering
Unravelling the Complex Motivations behind China’s FDI
No full textWe empirically investigate the factors that drive China's outward FDI using dynamic panel methods for 27 countries from 1995 to 2002. Based on the literature review we test three hypotheses: comparative advantages in low wage countries, vertical integration towards resource and human capital abundant countries, and the transaction-enforcing FDI to complement exports. Our results provide strong support for the transaction-enforcing motive: China’s FDI follows exports. Next, only in the presence of exports, low income per capita is important arguably because low-income countries have a preference for Chinese low-cost exports. Finally, though this series we find no evidence of FDI to skill-abundant countries and no evidence that host market resources or governance matters
Post Merger Innovative Patterns in Small and Medium Firms
No full textThis paper investigates whether involvement in mergers and acquisitions (M&As) triggers distinct patterns of innovative behaviour across firms situated at different points on the firm size distribution. Firms use more and more M&As as mechanisms to bridge the gap between where they are and what they want to achieve in terms of innovation and performance. We explore the different impact of M&A activity on the likelihood that firms begin to innovate using an unique dataset combining innovation and economic firm-level data from two different sources: the 4 waves of Community Innovation Survey and the Business Register, for the Dutch manufacturing sector. The analysis is carried out at different size classes. The results show that both new entry and persistence in innovative activities are fostered by M&A involvement. Medium firms are the ones showing the highest probabilities of entering /persisting in innovative activities after M&As. For small firms, M&As do not ease the overcome of “the innovative threshold”; on the contrary they seem to increase the probability of exiting innovative status in the post-merger period
The Contest for Olympic Succes as a Public Good
No full textThis study considers the performance of countries at the Olympic Games as a public good. Firstly, it is argued that, at the national level, Olympic success meets the two key conditions of a public good: non-rivalry and non-excludability. Secondly, it is demonstrated that standard income inequality measures, such as the Lorenz curve and the Gini index, can be successfully applied to the distribution of Olympic success. The actual distribution of Olympic success is compared with alternative hypothetical distributions, among which according to population shares, the distribution favoured by a social planner and the noncooperating Nash- Cournot distribution. By way of conclusion, a device is proposed to make the distribution of Olympic success more equitable
How to Reform the EU Budget? A Multidisciplinary Approach
No full textThe European Commission is currently drafting a proposal for a review of the EU budget, which could lead to its most significant reform to date. This paper proposes a method for restructuring the EU budget, based on a multidisciplinary approach. The insights of public sector economics, fiscal federalism, political science and the literature on the concept of “subsidiarity” are combined to assess which policies should be funded by the EU budget, and by how much. The resulting four complementary analyses are brought together into an eight-step chart, which is used to analyze in detail one area of policymaking - education policies – to assess whether it should be funded by the EU budget. Extending the analysis to the budget as a whole, the paper finds that the EU budget should be shared into five areas, each corresponding to an EU objective: economic growth, sustainable development, convergence of the EU economies, external security and internal security
Survivor: The Role of Innovation in Firms' Survival
No full textThis paper explores the relationship between innovation and the survival of manufacturing firms in the Netherlands. The determinants of the survival probability of a firm, traditionally identified in the size and age of a firm, are extended to include the ability of a firm to introduce an innovation in the market. The empirical analysis combines economic and demographic data from the Business Register of the population of firms active in the Netherlands with data on innovation derived from the second Community Innovation Survey. The survival probability of a firm is estimated by using a non-parametric approach: Transition Probability Matrices were calculating over different time periods. We observe that, in general, innovation has a positive and significant effect on firms survival that increases as time lengthens.
Furthermore, our results confirm that small and young firms are those most exposed to the risk of exit, but at the same time those that benefit most of innovation to survive in the market, especially in the longer term
Regulating Money Laundering and Tax Havens: The Role of Blacklisting
No full textSince ten years, and more so, since September 11, 2001, international organizations such as the IMF, OECD and EU try to combat harmful tax competition, money laundering and terrorist financing. Blacklisting, the naming and shaming of uncooperative countries, was one of the strategies used from the very beginning of this new policy area. An analysis of the black listed countries over time shows, that the black lists got shorter and shorter over time. In 2006, Myanmar was the only country listed for money laundering, until it was finally also removed from the list. The paper wants to explore a) the reasons for removing large countries and especially EU countries from the list b) the wanted and unwanted effects blacklisting had for the named and shamed countries and discusses c) whether this necessarily means the end of blacklisting. We want to show d) a new way of greylisting which might be more compatible with the international diplomatic requirements. We developed a new indicator for rating countries with regard to cooperative behavior for tackling money laundering, which might also allow for benchmarking, a concept probably more accepted within the EU than blacklisting
Horizontal integration in markets for complementary components and vertical product differentiation: A case-based analysis in the semiconductor industry
No full textObservations of recent mergers and acquisitions (M&A) in the semiconductor and computer industry indicate that activities concentrate on the technology leaders in this market. The author examines the influence of players’ heterogeneous product technologies on their involvement in M&A. He provides a rationale for the influence with the help of a case study and a two-stage non cooperative game. The case is about an acquisition wave between suppliers in two semiconductor component markets. Exemplary for the whole industry, acquisition activities concentrated on the technology leader in one of the component markets. Technological heterogeneity is represented within a vertically differentiated product space in the model
Do loans harm? The Effect of IMF Programs on Inequality
No full textIMF programs consist of granting loans, and of conditionality that countries have to follow in order to qualify for them. The paper uses a pooled time-series cross section analysis, covering 98 countries over the period 1970-2000 in order to find out which effect IMF programs have on the personal and wage income distribution of the grant receiving country. Similar to findings on growth (Dreher 2006), IMF programs have also a negative impact on income. This is due mainly to conditionality, whereas the amount of loans granted does not seem to harm
Sale Price Expectations and Mortgage Commitment: Inaccuracy versus Price Setting Behaviour
No full textThis paper investigates why the homeowner’s expectation about the sale price of a house deviates from its market price. This paper has two distinct contributions. First, we argue that sale price expectations are individual specific. Omitting this individual effect leads to biased hedonic estimates. As a result, hedonic estimates conditional on individual characteristics are preferred. Second, we economically interpret the individual effect in terms of inaccuracy of homeowners and a specific type of price setting behaviour (“fishing for a relatively high selling price”). In particular, we focus on the role of mortgage commitment, which is measured by the loan-to-income ratio. We argue that homeowners with a higher loan-to-income ratio are less likely to move. Consequently, they incur a low opportunity cost of fishing. They are also less inclined to search. As a result, homeowners with a higher loan-toincome ratio might have more incentive to fish for a higher sale price, but they may also be less accurate with regard to the market price. Our estimates confirm these two hypotheses
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