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We examine government decisions to support troubled banks. Our contribution is the examination of how federalism can affect decisions to classify banks as systemically important. Whether a bank is viewed by politicians as ‘systemically important’ varies based on how its failure would affect supporters of the government. How a federation is designed has a strong influence on which banks are given public assistance. Where the top level of government is solely responsible for banks, there will be fewer systemically important institutions and so more banks will be allowed to fail. Where lower levels are responsible, governments will allow fewer failures. We use this approach to understand government support for failing banks in Germany. Our findings are relevant for the European Banking Union.
As the Covid-19 pandemic began to unfold in February, India’s dependence on Chinese inputs for the production of pharmaceutical products was debated intensely. This special report argues that the narrow discussion has fallen short in capturing India’s crucial role in global health as a provider of health-related goods to many developing countries. The report analyses trade data on over 200 categories of health-related goods, and provides quantitative evidence for the extent of many countries’ health-related import dependence on India. Given this de facto position of India, this report concludes that the current health crisis calls for a comprehensive Indian global health strategy that will allow the country to expand on the existing multilateral system.
This paper studies drivers’ responses to a ‘notched’ penalty scheme in which speeding penalties are stepwise and discontinuously increasing in speed. We present survey evidence suggesting that drivers in Germany are well aware of the notched penalty structure. Based on a simple analytical framework, we analyze the impact of the notches on drivers’ optimal speed choices. The model’s predictions are confronted with data on more than 150,000 speeding tickets from the Autobahn and 290,000 speed measures from a traffic monitoring system. The data provide evidence on modest levels of bunching, despite several frictions working against it. We analyze the normative implications and assess the scope for welfare gains from moving from a simple, notched penalty scheme to a more complex but less salient Pigouvian scheme.
Aufbruch in die Euro-Union
(2013)