Reforming the Defined-Benefit Pension System

Defined-benefit pensions typically expose workers to a form of financial risk that they are ill positioned to bear and unable to hedge. If workers understand that risk, they will offer employers a lower “price” (in the form of salary concessions) than the capital markets would offer for the same cash flow. The resulting financial inefficiency reduces the value of the firm sponsoring the pension plan. The paper identifies reforms that would essentially eliminate the financial risk borne by workers and hence the financial inefficiency inherent in risky pensions. It would also essentially eliminate the substantial financial exposure currently borne by taxpayers. The key reform elements are tighter rules governing funding and portfolio investment, market-oriented pricing of the insurance offered by the Pension Benefit Guaranty Corporation, and improved disclosure of information related to pension plans in firms’ public financial statements, in the federal budget, and in statements provided to workers.macroeconomics, defined-benefit pension, pension system, financial risk

Alternative strategies for aggregating prices in the CPI

Consumer price indexes ; Prices

Fiscal Policy and Social Security Policy During the 1990s

This paper reviews the course of fiscal policy and Social Security policy during the 1990s. The 1990s witnessed two fundamental changes in U.S. fiscal policy: a dramatic improvement in the current and projected budget balance, and a shift to a new political consensus in favor of balancing the budget excluding Social Security rather than the unified budget. The dramatic improvement in the budget outlook stemmed both from favorable developments in the economic environment and from deliberate policy actions that reduced budget deficits and later did not spend down the surpluses. In contrast, the 1990s did not witness significant changes in Social Security policy, although alternative visions of Social Security reform received tremendous analytic and popular attention. The 1994-1996 Advisory Council on Social Security presented three reform plans that placed important emphasis on additional prefunding. Each involved some form of investment in equities either centrally, through the trust fund, or in a decentralized manner, through individual accounts. Late in the decade, with the emergence of on-budget surpluses, the possibility of general revenue contributions to the Social Security system came under serious consideration. In the end, President Clinton decided to pursue Social Security reform based on general revenue contributions to the trust fund and centralized investment in equities rather than creating individual accounts, but his proposal was not adopted.

Quality Improvement in Health Care: A Framework for Price and Output Measurement

The durability of health care treatment, the substantial technical change in health care treatment, and the prevalence of third-party payment interact to create substantial difficulty in measuring the price and output of health care. This paper provides a framework for analyzing the demand for health care taking into account these difficulties. It then suggests how this framework might be used to improve measurement of health care prices and output.

Some Evidence on Finite Sample Behavior of an Instrumental Variables Estimator of the Linear Quadtratic Inventory Model

We evaluate some aspects of the finite sample distribution of an instrumental variables estimator of a first order condition of the Holt et al. (1960) linear quadratic inventory model. We find that for some but not all empirically relevant data generating processes and sample sizes, asymptotic theory predicts a wide dispersion of parameter estimates, with a substantial finite sample probability of estimates with incorrect signs. For such data generating processes, simulation evidence suggests that different choices of left hand side variables often produce parameter estimates of an opposite sign. More generally, while the asymptotic theory often provides a good approximation to the finite sample distribution, sometimes it does not

Do Firms Smooth the Seasonal in Production in a Boom? Theory and Evidence

Using disaggregated production data we show that the size of seasonal cycles changes significantly over the course of the business cycle. In particular, during periods of high economy-wide activity, some industries smooth seasonal fluctuations while others exaggerate them. We interpret this finding using a simple analytical model that describes the conditions under which seasonal and cyclical fluctuations can be separated. Our model implies that seasonal fluctuations can safely be disentangled from cyclical fluctuations only when the marginal cost of production is linear, and the variation in demand and cost satisfy certain (restrictive) conditions. The model also suggests that inventory movements can be used to isolate the role of demand shifts in generating any interaction between seasonal cycles and business cycles. Thus, the empirical analysis involves studying the variation in seasonally unadjusted patterns of production and inventory accumulation over different phases of the business cycle. Our finding that seasonals shrink during booms and that firms carry more inventories into high sales seasons during a boom leads us to conclude that for several industries, marginal cost slopes up at an increasing rate. Conversely, in a couple of industries we find that seasonal swings in production are exaggerated during booms and that inventories are drawn down prior to high sales seasons, suggesting that marginal costs curves flatten as production increases. Overall, we find considerable evidence that there are non-linear interactions between business cycles and seasonal cycles.

Short-term genome stability of serial Clostridium difficile ribotype 027 isolates in an experimental gut model and recurrent human disease

Copyright: © 2013 Eyre et al. This is an open-access article distributed under the terms of the Creative Commons Attribution License, which permits unrestricted use, distribution, and reproduction in any medium, provided the original author and source are creditedClostridium difficile whole genome sequencing has the potential to identify related isolates, even among otherwise indistinguishable strains, but interpretation depends on understanding genomic variation within isolates and individuals.Serial isolates from two scenarios were whole genome sequenced. Firstly, 62 isolates from 29 timepoints from three in vitro gut models, inoculated with a NAP1/027 strain. Secondly, 122 isolates from 44 patients (2–8 samples/patient) with mostly recurrent/on-going symptomatic NAP-1/027 C. difficile infection. Reference-based mapping was used to identify single nucleotide variants (SNVs).Across three gut model inductions, two with antibiotic treatment, total 137 days, only two new SNVs became established. Pre-existing minority SNVs became dominant in two models. Several SNVs were detected, only present in the minority of colonies at one/two timepoints. The median (inter-quartile range) [range] time between patients’ first and last samples was 60 (29.5–118.5) [0–561] days. Within-patient C. difficile evolution was 0.45 SNVs/called genome/year (95%CI 0.00–1.28) and within-host diversity was 0.28 SNVs/called genome (0.05–0.53). 26/28 gut model and patient SNVs were non-synonymous, affecting a range of gene targets.The consistency of whole genome sequencing data from gut model C. difficile isolates, and the high stability of genomic sequences in isolates from patients, supports the use of whole genome sequencing in detailed transmission investigations.Peer reviewe

Laser-modified one- and two-photon absorption:Expanding the scope of optical nonlinearity

It is shown that conventional one-photon and two-photon absorption processes can be made subject to nonlinear optical control, in each case significantly modifying the efficiency of absorption, through the effect of a secondary, off-resonant stimulus laser beam. The mechanistic origin of these laser-modified absorption processes, in which the stimulus beam emerges unchanged, is traced to higher-order terms in standard perturbation treatments. These normally insignificant terms become unusually prominent when the secondary optical stimulus is moderately intense. Employing a quantum formulation, the effects of the stimulus beam on one-photon and two-photon absorption are analyzed, and calculations are performed to determine the degree of absorption enhancement, and the form of spectral manifestation, under various laser intensities. The implications of differences in selection rules are also considered and exemplified, leading to the identification of dark states that can be populated as a result of laser-modified absorption. Attention is also drawn to the possibility of quantum nondemolition measurements, based on such a form of optical nonlinearity