Can Tight and Centralized Financial Regulation Prevent Financial Crises? Czech Government Bond Seignorage in the Historical Perspective
AbstractCan tight and centralized financial regulation prevent financial crises? Governments usually respond to financial crises with tightening and centralizing financial regulation. In this paper, we explore the historical parallels between the governmental responses to the financial crises at the end of the 19th and the beginning of the 20th century in the USA and the recent response of the European Union. Our rent- seeking model with endogenous rent derived from the historical narrative predicts that tight and centralized financial regulation might increase the risk of inflationary monetary policy. To illustrate our findings on an empirical example, we calculated the Czech government bond seignorage that represents the rent extracted through inflationary monetary policy.
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Bibliographic InfoPaper provided by Mendel University in Brno, Faculty of Business and Economics in its series MENDELU Working Papers in Business and Economics with number 2011-14.
Date of creation: Oct 2011
Date of revision:
Bureaucracy; corruption; economic efficiency; Chicago Public Choice; Virginia Public Choice; rent-seeking; rule of law;
Find related papers by JEL classification:
- G01 - Financial Economics - - General - - - Financial Crises
- G18 - Financial Economics - - General Financial Markets - - - Government Policy and Regulation
- G28 - Financial Economics - - Financial Institutions and Services - - - Government Policy and Regulation
- N11 - Economic History - - Macroeconomics and Monetary Economics; Industrial Structure; Growth; Fluctuations - - - U.S.; Canada: Pre-1913
- N21 - Economic History - - Financial Markets and Institutions - - - U.S.; Canada: Pre-1913
- N41 - Economic History - - Government, War, Law, International Relations, and Regulation - - - U.S.; Canada: Pre-1913
This paper has been announced in the following NEP Reports:
- NEP-ALL-2011-11-01 (All new papers)
- NEP-HIS-2011-11-01 (Business, Economic & Financial History)
- NEP-REG-2011-11-01 (Regulation)
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
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- Tomas Otahal, 2011. "Rent-Seeking Origins of Central Banks: The Case of the Federal Reserve System," MENDELU Working Papers in Business and Economics 2011-08, Mendel University in Brno, Faculty of Business and Economics.
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- Rockoff, Hugh, 1972. "American Free Banking Before the Civil War: a Re-Examination," The Journal of Economic History, Cambridge University Press, vol. 32(01), pages 417-420, March.
- Toma, Mark, 1982. "Inflationary bias of the Federal Reserve System : A bureaucratic perspective," Journal of Monetary Economics, Elsevier, vol. 10(2), pages 163-190.
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