We analyze the possibility of reduction of systemic risk in financial markets through Pigouvian taxation of financial institutions, which is used to support the rescue fund. We introduce the concept of the cascade risk with a clear operational definition as a subclass and a network related measure of the systemic risk. Using financial networks constructed from real Italian money market data and using realistic parameters, we show that the cascade risk can be substantially reduced by a small rate of taxation and by means of a simple strategy of the money transfer from the rescue fund to interbanking market subjects. Furthermore, we show that while negative effects on the return on investment (ROI) are direct and certain, an overall positive effect on risk adjusted return on investments (ROI RA) is visible. Please note that the taxation is introduced as a monetary/regulatory, not as a _scal measure, as the term could suggest. The rescue fund is implemented in a form of a common reserve fund.
A MAJOR SHORTCOMING of current neo-classical theory is the absence of the entrepreneur as the element which spontaneously originates decisions and change in the economy. Thus, William J. Baumol (1968) observed that currently 'the theoretical firm is entrepreneurless -the Prince of Denmark has been expunged from the discussion of Hamlet ' (p. 66, it. orig.), and further that 'the [neo-classical model of the firm] is essentially an instrument of optimality analysis of well-defined problems, arid it is precisely such (very important) problems which need no entrepreneur for their solution .... In all these models, automaton maximizers the businessmen are and automaton maximizers they remain' (ibid., pp. 67-68). The Austrian-inclined economists, from von Mises (1949) onwards, have tried to incorporate a spontaneously originative entrepreneur into economic analysis, but it was G. L. S. 1970 and 1979 a, b) who showed a possible path of the entrepreneurial decision-making process. However, he did not pursue this to incorporate the entrepreneur into the body of economic theory. In this paper,*(2) building mainly upon Shackle's work, we develop the argument that the entrepreneur is not a factor of production, and that he must be clearly differentiated from the manager, who is a factor. To establish this differentiation it is necessary to understand the manner in which entrepreneurial action is generated. For this purpose, an analysis of entrepreneurial expectations is carried out. In consequence we show how the entrepreneur as a non-factor is fitted into the theory of the firm. Shackle (particularly in
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