The 1988 Basel I Accord created a level playing field for international banks in terms of a minimum recommended amount of capital.[1]It was probably the most successful financial standard ever conceived. More than 100 countries claimed to have implemented the agreement, and in many countries it was applied to all banks. Basel II was agreed upon in 2004. Many of its 216 pages … [Read more...] about Basel III and Financial Reforms: What Should Emerging Economies Do?
Macroeconomics and Finance
Fighting Inflation With Better Communication
As the chair of the United States Federal Reserve from 2006-2014, Ben Bernanke liked to say that monetary policy is 98% talk and only two percent action. In other words, what the central bank says is hugely important. It can affect households, firms, and market expectations, and, in turn, impact the economy. That message could not be more important when considering inflation … [Read more...] about Fighting Inflation With Better Communication
The Pros and Cons of Simplified Tax Notices and Amnesties
Latin America needs to increase its rate of tax collection. With budgets tight and capital spending meager, the region can't tolerate rates of evasion for personal and corporate income taxes of up to 50% in many countries. Moreover, in a region already very unequal, tax evasion tends to increase inequality. But the challenges of improving tax collection are immense. Apart … [Read more...] about The Pros and Cons of Simplified Tax Notices and Amnesties
When Improving Infrastructure Can't Wait
Policymakers in Latin America and the Caribbean may be keenly aware that the region's crumbling roads, inefficient energy systems, and inadequate water and sanitation hold their countries back. But efforts to improve these and other infrastructure services get the short end of the stick. When governments reduce fiscal deficits, they consistently shortchange capital spending on … [Read more...] about When Improving Infrastructure Can’t Wait
Did Changes Among Firms Reduce Wage Inequality in Latin America?
For a long time, economists believed that inequality in the labor market could be explained fundamentally by differences in skills. Workers who were highly educated, experienced and skilled tended to be rewarded better by the labor market than workers who weren't. Firms were essentially irrelevant in this paradigm. Workers were rewarded for their productivity: It didn't matter … [Read more...] about Did Changes Among Firms Reduce Wage Inequality in Latin America?