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Comparing the impacts of financial regulation in Australia and the United States using country-specific financial CGE models

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Listed:
  • Nassios, Jason
  • Giesecke, James
  • Dixon, Peter
  • Rimmer, Maureen

Abstract

Jurisdiction-specific differences exist in the implementation of the Basel III capital adequacy requirements. This paper highlights one reason inhomogeneous cross-country capital regulations may materialise, by illustrating how the impacts of regulatory change [in this case, a rise in bank capital adequacy ratios (CARs)] can be affected by jurisdiction-specific differences in the structure of the financial sector. To this end, we begin by summarising the development of a new financial computable general equilibrium (financial CGE) model of the U.S. called USAGE2F. We then illustrate how explicit recognition of financial stocks and flows can broaden the scope of CGE analyses to include the effects of changes in CARs of financial agents, e.g., the commercial banks. Finally, our results are compared to findings of a similar policy scenario in Australia, with differences in the results largely attributable to cross-country differences in financial structure.

Suggested Citation

  • Nassios, Jason & Giesecke, James & Dixon, Peter & Rimmer, Maureen, 2017. "Comparing the impacts of financial regulation in Australia and the United States using country-specific financial CGE models," Conference papers 332891, Purdue University, Center for Global Trade Analysis, Global Trade Analysis Project.
    • Handle: RePEc:ags:pugtwp:332891
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    File URL: https://ageconsearch.umn.edu/record/332891/files/8453.pdf
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    References listed on IDEAS

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    1. Elijah Brewer III & George Kaufman & Larry Wall, 2008. "Bank Capital Ratios Across Countries: Why Do They Vary?," Journal of Financial Services Research, Springer;Western Finance Association, vol. 34(2), pages 177-201, December.
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    5. Peter B. Dixon & James. A. Giesecke & Maureen T. Rimmer, 2015. "Superannuation within a financial CGE model of the Australian economy," Centre of Policy Studies/IMPACT Centre Working Papers g-253, Victoria University, Centre of Policy Studies/IMPACT Centre.
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