We approach nancial systemic risk as a pollution issue. We study the political distortions that may occur when either regulation or taxation is adopted. A majority of low polluting portfolio owners strategically choose regulation in order to concentrate sacrices on the minority of high risk producers. Regulation is likely to be too harsh inthis case. A transaction tax has regressive e¤ects. It is voted when the majority is made by relatively large polluters. In this case, thetax level is likely to be too low.[...]

The Political Economy of Containing Financial Systemic Risk

PASSARELLI, Francesco
In corso di stampa

Abstract

We approach nancial systemic risk as a pollution issue. We study the political distortions that may occur when either regulation or taxation is adopted. A majority of low polluting portfolio owners strategically choose regulation in order to concentrate sacrices on the minority of high risk producers. Regulation is likely to be too harsh inthis case. A transaction tax has regressive e¤ects. It is voted when the majority is made by relatively large polluters. In this case, thetax level is likely to be too low.[...]
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Utilizza questo identificativo per citare o creare un link a questo documento: https://hdl.handle.net/11575/12675
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