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Business and Economics > Investments: Stocks

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Cover IMF Working Papers
A Destination-Based Allowance for Corporate Equity
Mr. Shafik Hebous
and
Mr. Alexander D Klemm
Following renewed academic and policy interest in the destination-based principle for taxing profits—particularly through a destination-based cash flow tax (DBCFT)—this paper studies other forms of efficient destination-based taxes. Specifically, it analyzes the Destination-Based Allowance for Corporate Equity (DBACE) and Allowance for Corporate Capital (DBACC). It describes adjustments that are required to turn an origin into a destination-based versions of these taxes. These include adjustments to capital and equity, which are additional to the border adjustments needed under a DBCFT. The paper finds that the DBACC and DBACE reduce profit shifting and tax competition, but cannot fully eliminate them, with the DBACE more sensitve than the DBACC. Overall, given the potential major political cost of switching from an origin to a destination-based tax system, we conclude that advantages of the DBCFT are likely to outweigh the transitional advantages of the DBACE/DBACC.
Keywords:
WP; interest rate; capital stock; Destination-Based Taxation; ACE; ACC; investment goods; notional interest rate; tax competition; interest receipt; competition policy tool; rate of return; border tax; depreciation rate; upfront tax cost; tax saving; Allowance for corporate equity; Value-added tax; Stocks; Discount rates; Corporate income tax; Global; Destination-based allowance; copyright Page; B. profit shifting; based allowance; E. exchange rate
Cover IMF Working Papers
Intercreditor Distribution in Sovereign Debt Restructuring
Mr. Ousmene J Mandeng
Intercreditor equity represents one of the main objectives of bankruptcy proceedings. Yet, recent restructurings of sovereign debt suggest that violation of intercreditor equity is common. While existing contractual provisions, and guidelines issued by creditor committees, establish fundamental principles about creditor treatment, they seem to remain too vague to guide debt restructuring processes effectively. The paper focuses on distribution, and argues that lack of clear guidelines for distribution may complicate and delay the resolution process and induce undue uncertainty about the predictability and viability of the restructuring outcome. The paper discusses and proposes parameters which may contribute to establishing explicit principles for the assessment of intercreditor equity in distribution.
Keywords:
WP; debt; present value; cash flow; restructuring proceeding; Aggregation problem; collective action; intercreditor equity; Paris Club; restructuring agreement; debt contract; present value terms; debt issue; cash-flow relief; Sovereign debt restructuring; Debt restructuring; Discount rates; Currencies; Stocks
Cover IMF Working Papers
Financial Market Volatility and the Implications for Market Regulation: A Survey
Louis O. Scott
Volatility in financial markets has forced economists to reexamine the validity of the efficient markets hypothesis, and new empirical approaches have been applied to the study of this important issue in recent years. Many of the recent studies have found evidence of excessive volatility. In the aftermath of the stock market crash of 1987 and the perceived increase in market volatility, some economists have advocated additional market regulations. Are these proposed regulations necessary and would they serve to reduce market volatility? This paper presents a review of recent studies on financial market volatility and examines the proposed regulations.
Keywords:
WP; bond market; initial margin; present value; discount rate; price-dividend ratio; market fundamental; mean reversion; markets hypothesis; equilibrium price; noise term; utility function; marginal utility; short position; asset price volatility; market regulation; ex post market fundamental; Stock markets; Asset prices; Stocks; Discount rates; Securities markets