Shift Of Wealth Research Articles

Effects of financial transfers on redistribution and risk sharing within the EU and the Euro Area

The effectiveness of European fiscal policies is of particular importance for the future economic performance of the community especially during times of crisis due to polarized public opinion and expert criticism. This study attempts to identify the redistributive and risk-sharing effects resulting from centralized financial transfers within the EU. We investigate a broader sample of EU (28) countries during 2000-2021 in addition to the Euro area countries used in most studies on the issue. Traditional regression methods and the Pooled Mean Group (PMG) model were used in order to maximize the objectivity of the analysis. The study’s results show that long-term redistribution is virtually absent with levels below 1%. In some cases, the values are even negative which is an interesting (but not unattested) finding in the context of such a sensitive issue as the permanent shift of wealth within the EA and EU. Budget transfers achieved a risk-sharing effect of 11% for the EU and 29% for the EA. Risk sharing levels are comparable and even better than those of some fully-fledged fiscal federations. This is an attestation to the capacity of the EU to successfully implement its intended policies despite some criticism.

Rising Income and Wealth Inequality in China: Empirical Assessments and Theoretical Reflections

ABSTRACT The lack of up-to-date data has hindered recent research on China’s income and wealth inequality. This article fills this void by bringing current official and private data sources looking at these inequalities. The authors further investigate the underlying structural and sectoral policies causing these disparities. They find that the top 1% income share roughly equals that of the bottom 50%. The personal wealth share going to the top 1% exceeds by 5 times the wealth going to the bottom 50%. Failures in redistributive policies have primarily caused these growing income and wealth gaps. Sectoral and national development policies favoring the real estate industry at the expense of the manufacturing industry have also resulted in large-scale wealth shifts, with Chinese households holding increasing housing assets and residential mortgages. This article shows that Piketty’s patrimonial capitalism not only applies to capitalist countries but also extends to China’s socialist market economy.

SPC를 활용한 기업인수시의 상장차익 증여세 과세에 관한 연구

This article aims at the current legal issues on gift taxation of earnings from securities-listing. Gift taxation has been very dramatically changed in Korea. In 2005 Korea has introduced a fully comprehensive gift tax in korean Inheritance and Gift Tax Law(KIGTL). The legislative purpose was to prevent an anomalous shift of wealth without cost between citizens. But fully comprehensive taxation can violate the principle of substantial legislated
 taxation. And also it can incapacitate the principle of proportionality. Gift taxation of earnings from securities-listing in § 41-3 KIGTL is one of the controversial provisions in KIGTL. Many companies are more and more
 using in securities-listing the special purpose acquisition company(SPAC) in mergers and acquisitions. Acquisition of SPAC and the object company of the acquisition can switch the securities of related companies and forthcoming listing in 5 years can be exempted from gift taxation, because the securities of SPAC are substituted by that of acquiring company. The author thinks that this may cause a destruction of taxation justice between taxpayers in company taxation law. This article shows a new way of reasonable interpretation of § 41-3 KIGTL.

The Acceleration of the Development of International Business Mediation after the Singapore Convention

The Convention on International Settlement Agreements Resulting from Mediation (hereinafter referred to as the Singapore Convention) entered into force on 12 September 2020. The States’ striking enthusiasm for the Singapore Convention since the day of its enactment and onwards seems to be an encouraging indicator of the increasing use of mediation for the settlement of international commercial disputes. More precisely, the Convention establishes an international legal framework for the enforcement of settlements reached through mediation, and provides for a very limited number of requirements thereon. Hence, and considering that the enforceability of arbitral awards is perceived as arbitration’s most important feature, the cross-border enforceability of the settlement agreements reached through mediation conferred by the Singapore Convention could somehow erode arbitration’s edge. Furthermore, the entry into force of the Singapore Convention will promote the use of mediation in the States comprised within the Belt and Road Initiative, in Europe and in the Asia- Pacific, namely within the construction sector and the shipping industry and also in investor-state disputes insofar as the wording of the Convention leaves room for an extensive interpretation that could encompass such disputes. Investment funds, reserved AIFs, share classes, fair treatment, seniority privilege, minimum interest privilege, non-contagion principle, preferential treatment, shift of wealth

Share Classes in Investment Funds and Fair Treatment of All Investors

Against the backdrop of the US and EU academic debate on share classes or preferential treatments in investment funds, the paper focuses on an Italian case study. In this jurisdiction, ‘reserved’ alternative investment funds (AIFs) issue Class A and Class B shares, where Class A are granted preferential rights in the form of nonexposure to risk of losses (seniority privilege) and/or a guaranteed minimum interest related to the nominal value of contributions (minimum interest privilege). In details, the seniority privilege entails that, if the net asset value (NAV) of the fund at T1 is lower than at T0, this will only impact on the aggregate value of Class B shares. Thanks to the minimum interest privilege, if the fund at T1 has yielded no returns (or a return lower than the minimum interest), the aggregate value of Class A shares will nevertheless increase by an amount equal to the minimum interest (e.g., 10% of the value of the contributions to the fund). In either case, the aggregate value of Class B shares is correspondingly (proportionately) reduced. The paper analyses such preferential rights under the ‘non-contagion’ principle, according to which, features specific to one share class shall not have a potentially adverse impact on other share classes of the same fund. According to the European Securities and Markets Authority (ESMA) (as well as the International Organization of Securities Commissions (IOSCO)), such a principle is an expression of the broader fairness standard. The outcome of the analysis is that preferential treatment shall be permitted as long as it has the effect of increasing the overall welfare of the relevant fund’s investors, whereas any preferential treatment resulting in a ‘wealth shift’ from one investor (or class) to another runs counter to the ‘non-contagion’ principle and is therefore unfair. Investment funds, reserved AIFs, share classes, fair treatment, seniority privilege, minimum interest privilege, non-contagion principle, preferential treatment, shift of wealth

Insolvency, Competition, and the Theory of the Firm

The paper examines the recent developments in the field of business crisis management, with a focus on the European and US legal cultures. The main argument is the need for a consistent framework between insolvency and competition law in the theory of the firm. The present analysis reveals the need for a proper balance between the principle of competition on the merits and the philosophy of business-rescue in order to avoid dysfunctions in the application of insolvency and antitrust statutes. After an overview of the main contact cases between the two disciplines, the article addresses the main lawmakers’ responses to this problem. In this context, the regulation on banking crises management represents a first attempt to strike a proper balance between the (apparently compelling) goals underlying insolvency and competition law. This article aims at providing some guidance for a systematic reading of the two disciplines. Moving from a holistic understanding of the theory of the firm, it suggests assigning competition law a pivotal role in order to pursue efficiency in the market and consistency in legal theory. Investment funds, reserved AIFs, share classes, fair treatment, seniority privilege, minimum interest privilege, non-contagion principle, preferential treatment, shift of wealth

The role of Sukuk in achieving sustainable development: Evidence from the Islamic Development Bank

The purpose of this study is to examine the compliance of Islamic Development Bank (IDB) Sukuk with Maqasid Al-Shari’ah (objectives of Islamic law) in relation to human development and well-being. The paper provides a theoretical model explaining how Sukuk can achieve Maqasid Al-Shari’ah by assessing the role of Sukuk in the circulation, development, and preservation of wealth to attain social justice. This study employs a qualitative methodology using an empirical case study. The primary data are collected through elite semi-structured interviews. The secondary data are obtained using a content analysis method from Sukuk’s Principle Terms and Conditions, Information Memorandum and IDB’s annual reports for the period 2007–2017 to explain the structures and features of the Sukuk and examine their compliance with the developed model. The findings indicate that the Medium Term Note (MTN) Sukuk program positively serves the elements of hifth al-mal (safeguarding wealth), showing a direct relationship between the shift of wealth among parties and the compliance of Maqasid Al-Shari’ah. This implies that the investments made by Sukuk would benefit everyone, including individuals, institutions, societies, and the whole country, to achieve human well-being and sustainable development. Nonetheless, the analysis suggests that Shari’ah supervisory boards need to focus more on the substance when structuring Sukuk to help Islamic finance benefit in terms of moving towards the achievement of Maqasid Al-Shari’ah.

Developing fashion retail operations to growth in emerging markets

ABSTRACTThis paper looks at the relations between the rise of emerging markets and the store openings of marketers from advanced countries. It focuses on the retail operations of Italian fashion brands that have opened sales points in order to gain entry into foreign markets. The paper presents an analysis of an expressly developed database of 2,141 store openings by 311 Italian fashion brands in 322 cities in 82 countries over the period 2006–2015. The analysis highlights a shift of brands stores openings from the developed countries toward emerging markets and discusses the impact of such trend and its relations with the heterogeneity of the firms and markets involved. Some propositions are then formulated regarding the consequences for brand marketers in the developed nations of this ongoing shift of wealth towards the emerging countries.

The Federalist Safeguards of Progressive Taxation

This Article considers the distributional consequences of the Supreme Court’s federalism jurisprudence over the past quarter century, focusing specifically on the anti-commandeering, anti-coercion, and state sovereign immunity doctrines. The first of these doctrines prevents Congress from compelling the states to administer federal programs; the second prevents Congress from achieving the same result through offers that for practical purposes the states cannot refuse; the third prohibits Congress from abrogating state sovereign immunity outside a limited class of cases. These doctrines vest the states with valuable entitlements and allow the states to sell those entitlements back to Congress for a price. In this respect, the doctrines have an intergovernmental distributional effect, shifting wealth from the federal government to the states. The distributional consequences of the anti-commandeering, anti-coercion, and state sovereign immunity doctrines are not purely intergovernmental, however. The doctrines also have potential implications for the distribution of wealth across individuals and households. By forcing Congress to bear a larger share of the costs of federal programs, and by shifting some of the costs of liability-imposing statutes from the states to Congress, these doctrines allow the states to raise less revenue and compel Congress to raise more. For a number of historical as well as structural reasons, the federal tax system is dramatically more progressive than even the most progressive state tax systems, and so the reallocation of fiscal responsibility resulting from these federalism doctrines causes more revenue raising to occur via the more progressive system. The likely net effect is a shift in wealth from higher-income households (who bear a larger share of the federal tax burden) to lower- and middle-income households (who would have borne a larger share of the burden of state taxes). This conclusion comes with a number of caveats. The distributional consequences of the Supreme Court’s federalism doctrines may be moderated—or magnified—by differences in federal and state spending priorities. Moreover, the doctrines may affect the size of government as well as the allocation of fiscal responsibility across levels of government (though the net effect on government size is ambiguous). And the doctrines may have distributional consequences that are not only interpersonal, but also intergenerational. What seems clear from the analysis in this Article is that federalism doctrines affect the distribution of income and wealth in subtle and sometimes unexpected ways, and that a comprehensive understanding of wealth inequality in the United States requires careful attention to key features of our fiscal constitution.

Equilibrium Wealth Share Dynamics

We empirically show across several broad asset classes that sectoral wealth shares do not positively correlate with their risk premia---a first-order prediction of canonical equilibrium models. We then analyze the roles mean-variance and hedging demand play in accounting for sectoral shifts within a two-sector production economy that features imperfect substitutability across goods and demand shocks. With these two features, the model's performance improves, yet still unsatisfactorily accounts for sectoral shifts in wealth shares. We argue that equilibrium models thus face a challenge to explain the cross-sectional evolution of wealth shares and investors' incentives to hold them over time.

The Market for Gold: Spdr Gold Shares and Beyond

This case is used in Darden's second-year elective, Financial Institutions and Capital Markets, and would work well in courses covering exchange-traded commodities funds. A teaching note for this case is pending publication. At the end of May 2012, Aram Shishmanian, CEO of the World Gold Council (WGC) was considering alternatives to promote gold as an investment asset. The WGC was the sponsor for SPDR Gold Shares, which was launched in 2004 and had become the most successful commodity-based exchange-traded fund, reaching a market value of around $64 billion. This had exceeded expectations, but allocations to gold remained small among U.S. long-term institutional investors. There would also an expected shift of wealth to countries such as China and India in the coming decade. Shishmanian was considering which gold investment vehicles would be best for the WGC to promote in the United States and other markets going forward. Excerpt UVA-F-1685 Rev. Jul. 19, 2013 THE MARKET FOR GOLD: SPDR GOLD SHARES AND BEYOND Sitting in his London office on May 31, 2012, Aram Shishmanian, CEO of the World Gold Council (WGC), was preparing for the upcoming June board meeting in Toronto, Canada. The WGC was the market development organization for the gold industry, and the council's mission was to stimulate and sustain demand for gold. The board members—chairmen and CEOs of leading gold mining companies—were flying in from Australia, Peru, South Africa, the United Kingdom, and the United States to attend the meeting at which Shishmanian and his team were to present the results of a strategic review of the activity of the council and share their recommendations for the coming three to six years. The WGC's biggest initiative to date, the first-ever physically backed gold exchange-traded fund (ETF) listed on the NYSE, the SPDR Gold Shares (GLD), which launched in 2004, was reaching a market value of around $ 64 billion. This went well beyond expectations, but allocations to gold remained small among long-term institutional investors. At the upcoming board meeting, what should Shishmanian propose that the WGC do next to stimulate gold demand among investors? What investment vehicles could the WGC help develop in the United States and beyond? The spectacular growth of GLD holdings had attracted attention, but many front-page news articles on gold these days were focused on gold prices. Gold's long-standing role as a safe-haven asset had been brought back into the spotlight with the European sovereign debt crisis and the expansionary U.S. monetary policy following the 2008 financial crisis. Gold prices reached a peak of more than $ 1,900 per ounce in August 2011, before dropping slightly (Figure 1). Some analysts were questioning whether gold was “losing its luster as the currency of last resort,” yet a recent Goldman Sachs report argued for a positive outlook for gold. Figure 1. Gold spot prices, January 1979–May 2012 (U.S. dollars/troy ounce London PM Fix). . . .

The Working Poor: Two Perspectives on Reality—A Communication to the Editor Inviting a Discussion

The Working Poor: Two Perspectives on Reality—A Communication to the Editor Inviting a Discussion

Climate vulnerability as a relational concept

Within the rapidly expanding literature on the human dimensions of climate change, the ways in which the term vulnerability is used have proliferated. With the increasing influence of the concepts of adaptation and social resilience, there has been the tendency to treat vulnerability as a characteristic of individuals or social groups. In this respect, various quantitative measures of poverty are used as indicators of vulnerability. These approaches run counter to approaches that embrace context and most importantly the social relations that shape the multidimensionality of vulnerability. This paper engages these different viewpoints by juxtaposing the wealth trajectories of the members of 54 households in western Niger from 1984–1994 with an understanding of the changing social relations among these individuals gained from surveys and open-ended interviews of household members. Data analysis shows that poverty alone is an incomplete measure of an individual or household’s vulnerability to loss due not only to the randomness of biophysical hazard but also to different obligations and entitlements attached to wealth. Shifts in wealth following the historic drought of 1984, were more related to longer-term changes in social relations tied to recurrent drought during and before the study period than to the 1984 “trigger” itself. Women and junior men gained wealth relative to senior men. The gains in wealth among women do not reflect their lower vulnerability compared to senior men but rather, their reactions to address their vulnerable positions. In this way, measures of poverty, uninformed by an understanding the changing qualitative nature of social relations, are poor measures of vulnerability in the Sahelian region.

Message to Congress: Halt the Tax Exemption for Perpetual Trusts

The federal estate tax is in abeyance this year. The popular press has picked up on the possibility that the estates of billionaires such as the late George Steinbrenner will escape the tax. The House Ways and Means Committee and the Senate Finance Committee are now considering two questions: what the rate and maximum exemption will be when the estate tax returns and whether the tax will be reinstated for this year. Lurking behind the headlines but equally important is another tax, the federal generation-skipping transfer tax (GST Tax), which is also in abeyance this year. In 1986, the 99 Congress passed the GST Tax. The purpose was to supplement the federal estate and gift taxes. When private wealth shifts from generation to generation or bypasses a generation without incurring federal estate or gift taxes, the GST Tax steps in and fills the void. When the 99th Congress passed the GST Tax, it added a provision known as the GST Exemption. The GST Exemption allows trust settlors to create trusts without incurring GST Tax. The maximum amount originally exempted was $1 million ($2 million for a married couple), but over time, the maximum amount was increased to $3.5 million ($7 million for a married couple). When the 99th Congress fashioned the GST Exemption, the duration of private trusts was controlled by state perpetuity law. State perpetuity law was then undergoing reform in the states, but the reforms retained the basic durational limit that has been part of Anglo-American law for centuries. Presumably relying on the states to honor tradition, the 99th Congress did not impose a federal durational limit on trusts that qualify for the GST Exemption. With federal law out of the way, the only law blocking a tax exemption for perpetual trusts was state perpetuity law, but that obstacle soon crumbled. As a result of interstate competition for trust business, the state-law perpetuity landscape changed dramatically. The absence of a durational limit on the GST Exemption spawned a movement in the states to repeal or modify state perpetuity rules to allow trust settlors to create trusts that can last forever or for several centuries. It is now well documented that the wealthy are creating GST-exempt perpetual or near-perpetual trusts in large numbers in these trust-friendly states. Considerable private wealth is pouring into GST-exempt trusts from out-of-state settlors, thereby escaping federal transfer taxation for centuries and in some cases forever. The loss of tax revenue will become more acute as time passes. The 111th Congress now has a perfect opportunity to close the loophole in the GST Exemption. The 2010 tax bill is still being finalized. Congress should adopt a durational limit that is calibrated to the generations-based policy of the GST Tax. A few years ago, the Staff of the Joint Committee on Taxation wisely proposed a two-generation limit. Under the Staff proposal, a trust would not qualify for the exemption if it can continue beyond the death of the youngest beneficiary who is no more than two generations younger than the trust settlor. A softer approach would be to provide that a trust initially qualifies for the exemption but loses its exemption once the youngest beneficiary who is no more than two generations younger than the trust settlor passes away. Either approach would put a halt to the ill-advised perpetual or near-perpetual trust movement and the unwarranted loss of tax revenue that is now occurring. Unless and until Congress acts to stop them, trust settlors will continue to pour private wealth into GST-exempt perpetual or near-perpetual trusts this year, next year, the year after, and every future year, and more and more states will modify their perpetuity rule to encourage them to do so.

Risk-sharing and crises. Global games of regime change with endogenous wealth

Abstract I add heterogeneous agents and risk-sharing opportunities to a global game of regime change. The novel insight is that when there is a risk-sharing motive, fundamentals drive not only individual behavior, but also select which individuals are more relevant for the likelihood of a crisis because of endogenous shifts in wealth. If attacking is relatively safe, attack behavior in the global game and trade in state-contingent assets feed back into each other. This feedback implies that multiple equilibria may exist even if signal noise becomes arbitrarily small. In addition, heterogeneity in risk-aversion within the population amplifies the influence of the state of the economy on the probability of a crisis.

Risk-Sharing and Crises: Global Games of Regime Change with Endogenous Wealth

I add heterogeneous agents and risk-sharing opportunities to a global game of regime change. The novel insight is that when there is a risk-sharing motive, fundamentals drive not only individual behavior, but also select which individuals are more relevant for the likelihood of a crisis because of endogenous shifts in wealth. If attacking is relatively safe, attack behavior in the global game and trade in state-contingent assets feed back into each other. This feedback implies that multiple equilibria may exist even if signal noise becomes arbitrarily small. In addition, heterogeneity in risk-aversion within the population amplifies the influence of the state of the economy on the probability of a crisis.

The Financial Crisis from the Family's Perspective: Evidence from the 2007–2009 SCF Panel*

This paper examines changes in families' finances as captured in the 2007–2009 Survey of Consumer Finances panel. The broad contours of changes in families' assets, debts, and wealth align with changes in the corresponding aggregate measures, but the microdata from the panel highlight substantial variation in families' experiences between 2007 and 2009. Although more than 60% of families saw their wealth decline over the two‐year period, a sizable fraction experienced gains in wealth, while some families' financial situations saw little change on net. The shifts in wealth do not appear to be correlated in a simple way with families' characteristics. Instead, the patterns of mixed losses, gains, and modest shifts in wealth generally hold within groups defined by demographic characteristics or by 2007 wealth or income. On the whole, changes in wealth appear to stem from changes in asset values rather than from changes in portfolio composition or debt levels.

Tax Reform in Australia: A View from the Left

In this paper I use Marxist analysis to examine certain aspects of tax in Australia as a way to help understand the meaning or essence of tax reform. I argue that because of stagnant or declining profit rates globally progressive tax reform today can only be built through and on the back of class struggle. The struggles in the Arab world, Europe and the outbreak of demonstrations and sit-ins that was the Occupy movement globally show the possibilities of struggle to improve our lives here and now and give a glimpse of a new word. The lack of sustained class struggle in Australia over the last 3 decades is a negative proof of the argument. Without class struggle over that period what we have seen in Australia is a neoliberalisation of tax policy and growing tax inequality as part of a wider embrace of neoliberalism and a shift in wealth from labour to capital. Class struggle could reverse that trend. Demands for a progressive tax system and its implementation can and will flow from basic struggle on the shopfloor and in the offices for real wage increases and job justice. Tax justice follows on from and will flow from winning job justice.

Financial Innovation and Asset Price Volatility

We compare asset prices in an overlapping generations model for incomplete and complete markets. Individuals within a generational cohort have heterogeneous beliefs about future states of the economy and thus would like to make bets against each other. In the incomplete-markets economy, agents cannot make such bets. Asset price volatility is very small. The situation changes dramatically when markets are completed through financial innovations as the set of available securities now allows agents with different beliefs to place bets against each other. Wealth shifts across agents and generations. Such changes in the wealth distribution lead to substantial asset price volatility.

Reason in Revolt Now Thunders to End the Age of Neoliberal Tax Cant

This paper looks at the political economy of tax reform in Australia and argues that without an upsurge in resistance to neoliberal policies the ongoing shift of wealth to capital from labor in Australia will continue. The first part of the paper looks briefly at some of the social ferment going on around the globe to give some context to the resistance to neoliberalism and the demand for tax justice. I then explain what neoliberalism and Keynesianism are and how the reality of profit over people renders Keynesianism a dead end while the reality of economic crisis renders neoliberalism an anachronism. I go on to discuss the tendency of the rate of profit to fall in its global and Australian contexts. I finish off by examining the neoliberal tax reforms of the carbon tax, the Minerals Resource Rent Tax and the neoliberalism underpinning the Australia’s Future Tax System Report (‘the Henry Tax Review’).