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Publication The Policy Trajectories of Autonomous Vehicles(2018-05-30) MacDuffie, John PaulAutonomous Vehicle (AV) technology promises to dramatically reduce deaths and economic losses from crashes caused by human error, increase mobility for those with disabilities, and revolutionize the auto industry. Yet legislation to facilitate oversight of the development and deployment of AVs is stalling in Congress. Professor John Paul MacDuffie offers a primer on AV technology policy, and discusses strategies for addressing safety and other public concerns while still facilitating AV innovation in the private sector.Publication The Issue at the Heart of America’s Great Unbanking(2017-05-01) Servon, LisaConsumer protection regulation targets services like payday lenders under the presumption that these services can be predatory and associated with high costs. Yet an increasing number of Americans are utilizing such alternative financial services and joining the ranks of the “unbanked” and “underbanked.” Altering this status quo and promoting greater middle-class stability will require that policymakers foster innovation in the development of high-quality, transparent, and consumer-oriented financial services within the mainstream banking system.Publication Perverse Nudges: Minimum Payments and Debt Paydown in Consumer Credit Cards(2014-04-01) Keys, Benjamin J; Keys, Benjamin JCredit card minimum payments can act as an “anchor” that causes consumers to pay less of their debt than they otherwise would, leading to higher balances and interest costs, lower credit card scores, increased bankruptcy risks, and in the aggregate, suboptimally high levels of debt in the macro-economy. Policy “nudges,” which aim to increase the monthly amount that individuals pay on their credit card debt, have had mixed results.Publication A New Coalescence in the Housing Finance Reform Debate?(2016-06-01) Wachter, Susan M; Wachter, Susan M; McCoy, Patricia AIn the wake of the stalled Johnson-Crapo bill, the overarching goal of housing finance reform continues to be the efficient provision of long-term fixed-rate mortgages to credit-worthy borrowers in all markets throughout the business cycle.This Issue Brief analyzes three newly-proposed plans for reforming the U.S. housing finance system: (1) a proposal from Jim Parrot et al. to merge Fannie Mae and Freddie Mac into a new government corporation; (2) Andrew Davidson’s proposal for mutual ownership of the GSEs by mortgage originators; and (3) an opposing plan from Mark Calabria, arguing against securitization altogether and for a return to the regime of originate-and-hold.Publication Improving Future Policy Responses to Foreseeable Bank Risk-Taking(2019-09-01) Gomes, Joao F; Grotteria, Marco; Wachter, Jessica AThis brief offers new perspectives on the behavior of banks during the financial crisis of 2007-08 and the limited success of unconventional monetary policies in stimulating bank credit to the private sector during the subsequent economic recovery. The common narrative about the financial crisis is that it was caused by a large credit expansion with overly risky loan-granting behavior by banks. We argue, however, that banks actually made optimal financial decisions in the lead-up to the crisis, based on their calculation of their franchise value. The brief explains the mechanics of franchise value—how it led banks to shift their portfolios toward riskier household loans before the crisis, as well as how it dampened the impact of quantitative easing and other novel monetary policies meant to stimulate the investment of capital into the private sector. Policymakers have failed to recognize the role that franchise value plays in all bank decisions. If they wish to devise appropriate fiscal or monetary policies to prevent or mitigate a future crisis, they need to properly account for how franchise value drives the decision-making of bank managers.Publication Five Years after Dodd-Frank: Unintended Consequences and Room for Improvement(2015-12-01) Skeel, David A; Skeel, David AThis brief offers a 5-year retrospective on Dodd-Frank, pointing out aspects of the legislation that would benefit from correction or amendment. Dodd-Frank has yielded several key surprises—in particular, the problematic extent to which the Federal Reserve has become the primary regulator of the financial industry. The author offers several recommendations including: clarification of the rules by which strategically important financial institutions (SIFIs) are identified; overhauling the incentives offered to banks; instituting bankruptcy reforms that would discourage government bailouts; and easing regulatory burdens on smaller banks that are disproportionately burdened by the SIFI designation process.Publication The Presidency, Congressional Republicans, and the Future of Financial Reform(2017-02-01) Conti-Brown, PeterThis brief examines the tension between the Republican ideological commitment to curbing executive power and the opportunity Republicans now have for Trump to dominate the direction of financial regulatory reform. The discussion will focus on three key policy outcomes that Republicans have sought during the last six years: reforming the Federal Reserve, overhauling the Consumer Financial Protection Bureau, and changing the way in which the nation’s largest financial institutions are designated and regulated.Publication Cryptocurrency Competition and the U.S. Monetary System(2018-06-21) Fernandez-Villaverde, Jesus; Fernandez-Villaverde, JesusAdvocates of cryptocurrencies such as Bitcoin believe that having currency competition will help achieve the economic objective of price stability. This Issue Brief summarizes research that explores whether competition among privately issued fiat currencies can actually produce price stability. The research finds that in most cases, a system of private monies does not deliver price stability. And even when it does, it always is subject to self-fulfilling inflationary episodes, and it supplies a suboptimal amount of money. Although there is no economic reason to curb the use of cryptocurrencies at the moment, it is important to review key regulatory issues that policymakers need to consider now, before the use of cryptocurrencies becomes even more widespread.Publication Lessons for Policymakers and Regulators on the (Predictable) Future of the Digital Economy(2017-01-01) Werbach, Kevin; Werbach, KevinThe next stage in the evolution of the digital economy involves the creation of what can be called the “Internet of the World”—an expanding web of transactions, anticipated today by on-demand platforms such as Uber and Airbnb, that eventually will occur across trillions of networked devices and penetrate every sphere of human activity. This brief looks at the many legal questions raised by these novel services, in particular, at the regulatory classification of on-demand services, as well as the application of antitrust provisions, the imposition of taxes and fees, and the assignment of liability to these new platforms.Publication The Missing Pieces of the Economic Debate Over Immigration Reform(2018-08-06) Hernandez, ExequielTo the extent that immigration reform is discussed in terms of economics, the debate tends to focus exclusively on labor issues-specifically, how immigrants affect jobs and wages for native citizens. But to understand the economic effects of immigration, and thus develop sounder policies, policymakers need to consider how immigration affects all three core components of economic growth: not just labor, but capital and innovation too. In the Penn Wharton Public Policy Brief, "The Missing Pieces of the Economic Debate Over Immigration Reform/whr.tn/2vmKbK8>," Professor Exequiel Hernandez discusses new research showing that immigration produces gains for the U.S. economy with respect to capital and innovation. Immigrants help to attract investment from foreign firms and significantly increase bilateral trade flows between the U.S. and their home countries. Immigrants also account for roughly a quarter of all U.S. entrepreneurs. They not only generate novel businesses and inventions, but also introduce novel ideas that U.S. citizens develop further to create new products and companies of their own. Just as importantly, labor, capital, and innovation are all interrelated. Policies that target one growth component (such as labor) can carry unintended negative consequences for the other two, and result in undesirable economic outcomes.
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