Narrow Results

Understanding the impacts of transparency in capital markets is important for determining the trading mechanism and for evaluating market efficiency and market fairness. The recent reforms covering trade transparency on the Taiwan Stock Exchange give us an opportunity to address and examine the relevant arguments. Evidence from this study indicates that increasing trade transparency may create a more efficient market due to decreased effective spreads compared with before the event. Asymmetric information also declines after transparency is liberalized. However, the movement direction of the realized spread does not seem obvious or pronounced. The implication from our results is that the exact effects from trade transparency may be dependent on the stock market's structure itself.

We show that new trade restrictions implemented since the onset of the global financial crisis have had — in the limited products targeted — a strong distortionary impact on trade. Their aggregate impact is modest, however, as most countries have resisted a widespread resort to protectionism. Looking ahead, sustained high unemployment, uneven growth, and an unwinding of government stimulus measures suggest that protectionist pressures may rise. Continuing and further enhancing monitoring of all protectionist measures will help, but the surest way to avoid such a downside scenario is to tighten multilateral trade commitments by completing the World Trade Organization (WTO) Doha Round.

Can fiscal transparency, accountability and macro-fiscal stabilization be imposed by adopting a fiscal responsibility law (FRL)? Skeptics argue that law is impotent or that the existing legal framework for the budget system suffices. In Europe, supranational fiscal rules were previously seen to be adequate. After reviewing the experience with FRLs around the world, this paper concludes that FRLs enhance fiscal transparency and accountability. However, the adoption of a FRL for attaining fiscal stability goals succeeds only if there is strong political commitment to fiscal discipline. Also, the inclusion of quantitative fiscal rules in FRLs is a high-risk undertaking.