In Praise of (Some) Red Tape: A New Approach to Regulation

Abstract

The costs of removing red tape include a lower chance of detecting recession‐generating flaws in the financial system. What we call independent dimensions of regulation (IDRs) operate more or less independently from other groupings. If an IDR's optimality is unknown, it may be risky to remove. Uncertainty thus implies that (some) red tape – a small amount of overregulation – is justified, in contrast to the Brainard principle that uncertainty dictates less policy activism. The long‐run Gross Domestic Product (GDP) benefit of a 1 per cent improvement in financial services productivity is 0.06 per cent in our computable general equilibrium model. These relatively modest gains reinforce our conclusion.

The Economy‐wide Impacts of a Rise in the Capital Adequacy Ratios of Australian Banks

“…For example, Menzies et al . () argue that because the costs of financial crises are potentially very high relative to the costs imposed by regulation, and because the effectiveness of each independent regulation cannot be known with certainty, a policy bias in favour of apparent regulation duplication in the financial sector is warranted.…”

“…Atkinson et al argue that such estimates are helpful because they provide a measure of the potential benefits against which the costs of regulations aimed at avoiding future crises can be weighed. For example, Menzies et al (2016) argue that because the costs of financial crises are potentially very high relative to the costs imposed by regulation, and because the effectiveness of each independent regulation cannot be known with certainty, a policy bias in favour of apparent regulation duplication in the financial sector is warranted. While Australia was spared economic damage of the magnitudes visited on the USA and Europe, it was not immune.…”

Pitching research: ‘qualitative cousins’ and the ‘extended family’

“…Various recent published articles acknowledge Faff's (2015) template as a critical research planning tool, for example Chang and Wee (2016); Menzies et al (2016); Dang and Henry (2016); Mathuva (2016); Mathuva and Kiweu (2016); Dupire and M'Zali (2016); Sivathaasan et al (2017); Ali et al (2017); Unda et al (2018). Table 7 displays a range of such papers, linking them to their associated ex ante pitches as logged in the PR elibrary.…”

“…Various recent published articles acknowledge Faff's () template as a critical research planning tool, for example Chang and Wee (); Menzies et al . (); Dang and Henry (); Mathuva (); Mathuva and Kiweu (); Dupire and M'Zali (); Sivathaasan et al . (); Ali et al .…”

The investment strategies of sovereign wealth funds: A reverse engineered pitch

“…For instance, research planning tool (e.g. Chang & Wee, 2016;Menzies et al, 2016); a research skills development tool (Faff, 2016); a research learning tool Ratiu, 2016); for details see Faff (2017).…”