Monetary Policy and Asset Mispricing

This paper investigates whether conventional interest rate policy of central banks is a suitable instrument to attenuate excessive mispricing in stocks as suggested by the proponents of a "leaning against the wind" (LATW) monetary policy. For this, we decompose the stock price into a fundamental, a risk premium and a mispricing component. We argue that mispricing can arise for two reasons: (i) from false subjective expectations of investors about future fundamentals and equity premia, and (ii) from the inherent indeterminacy in asset pricing in line with rational bubbles. Employing a partial equilibrium asset pricing model, we show that the response of the excessive stock price component to a monetary policy shock is ambiguous in both the short- and long-run, and depends on the nature of the mispricing. Subsequently, we evaluate the scope for a LATW policy empirically by employing a time-varying parameter VAR with a flexible identification scheme based on impact and long-run restrictions using data for the S&P500 index from 1962Q1 to 2014Q4. We find that a contractionary monetary policy shock in fact lowers stock prices beyond what is implied by the response of their underlying fundamentals

ECB asset purchases may affect wealth distribution

In the debate on monetary policy decisions, to date, little attention has been paid to distributional effects. One reason for this is that they are not included in the mandate of the European Central Bank (ECB). Given the loose monetary policy stance in the euro area and the large-scale program to purchase government and corporate bonds launched in January 2015, the question increasingly being asked is whether any distributional effects can be ignored any longer. The present report looks at the channels of monetary policy that are potentially relevant to distribution and conducts an initial assessment of their relevance to asset purchases in the euro area. The asset purchase program has probably led to rising asset prices, thereby mainly benefitting households at the upper end of the wealth distribution. This is likely to lead to a direct increase in wealth inequality. Whether or not this increase can be at least partially offset in the long term is uncertain. Indebted and/or low-income households could benefit if the program contributes successfully to economic recovery and higher inflation, and therefore helps to improve employment opportunities. So far, the overall distributional effect is therefore unclear. A more in-depth analysis is required in the future

Reading between the lines: Using media to improve German inflation forecasts

In this paper, we examine the predictive ability of automatic and expert-rated media sentiment indicators for German inflation. We find that sentiment indicators are competitive in providing inflation forecasts against a large set of common macroeconomic and financial predictors. Sophisticated linguistic sentiment algorithms and business cycle news rated by experts perform best and are superior to simple word-count indicators and autoregressive forecasts

Quantitative easing - What are the side effects on income and wealth distribution: In-depth analysis

IP/A/ECON/2015-01 - This policy contribution was prepared for the European Parliament Committee on Economic and Monetary Affairs ahead of the European Parliament’s Monetary Dialogue with the President of the European Central Bank on 15 June 2015

Arthroscopy or ultrasound in undergraduate anatomy education: a randomized cross-over controlled trial

Background: The exponential growth of image-based diagnostic and minimally invasive interventions requires a detailed three-dimensional anatomical knowledge and increases the demand towards the undergraduate anatomical curriculum. This randomized controlled trial investigates whether musculoskeletal ultrasound (MSUS) or arthroscopic methods can increase the anatomical knowledge uptake. Methods: Second-year medical students were randomly allocated to three groups. In addition to the compulsory dissection course, the ultrasound group (MSUS) was taught by eight, didactically and professionally trained, experienced student-teachers and the arthroscopy group (ASK) was taught by eight experienced physicians. The control group (CON) acquired the anatomical knowledge only via the dissection course. Exposure (MSUS and ASK) took place in two separate lessons (75 minutes each, shoulder and knee joint) and introduced standard scan planes using a 10-MHz ultrasound system as well as arthroscopy tutorials at a simulator combined with video tutorials. The theoretical anatomic learning outcomes were tested using a multiple-choice questionnaire (MCQ), and after cross-over an objective structured clinical examination (OSCE). Differences in student's perceptions were evaluated using Likert scale-based items. Results: The ASK-group (n = 70, age 23.4 (20--36) yrs.) performed moderately better in the anatomical MC exam in comparison to the MSUS-group (n = 84, age 24.2 (20--53) yrs.) and the CON-group (n = 88, 22.8 (20--33) yrs.; p = 0.019). After an additional arthroscopy teaching 1 % of students failed the MC exam, in contrast to 10 % in the MSUS- or CON-group, respectively. The benefit of the ASK module was limited to the shoulder area (p < 0.001). The final examination (OSCE) showed no significant differences between any of the groups with good overall performances. In the evaluation, the students certified the arthroscopic tutorial a greater advantage concerning anatomical skills with higher spatial imagination in comparison to the ultrasound tutorial (p = 0.002; p < 0.001). Conclusions: The additional implementation of arthroscopy tutorials to the dissection course during the undergraduate anatomy training is profitable and attractive to students with respect to complex joint anatomy. Simultaneous teaching of basic-skills in musculoskeletal ultrasound should be performed by medical experts, but seems to be inferior to the arthroscopic 2D-3D-transformation, and is regarded by students as more difficult to learn. Although arthroscopy and ultrasound teaching do not have a major effect on learning joint anatomy, they have the potency to raise the interest in surgery

Perfluoro Alkyl Hypofluorites and Peroxides Revisited

A more convenient synthesis of the perfluoro alkyl hypofluorite (F3C)3COF as well as the hitherto unknown (C2F5)(F3C)2COF compound is reported. Both hypofluorites can be prepared by use of the corresponding tertiary alcohols RFOH and elemental fluorine in the presence of CsF. An appropriate access to these highly reactive hypofluorites is crucial. The hypofluorites are then transferred into their corresponding perfluoro bisalkyl peroxides RFOORF [RF=(F3C)3C, (C2F5)(F3C)2C] by treatment with partially fluorinated silver wool. NMR, gas‐phase infrared, and solid‐state Raman spectra of the perfluoro bisalkyl peroxides are presented and their chemical properties are discussed

Forecasting the Risk of Speculative Assets by Means of Copula Distributions

The GARCH(1,1) model and its extensions have become a standard econometric tool for modeling volatility dynamics of financial returns and port-folio risk. In this paper, we propose an adjustment of GARCH implied conditional value-at-risk and expected shortfall forecasts that exploits the predictive content of uncorrelated, yet dependent model innovations. The adjustment is motivated by non-Gaussian characteristics of model residuals, and is implemented in a semiparametric fashion by means of conditional moments of simulated bivariate standardized copula distributions. We conduct in-sample forecasting comparisons for a set of 18 stock market indices. In total, four competing copula-GARCH models are contrasted against each other on the basis of their one-step ahead forecasting performance. With regard to forecast unbiasedness and precision, especially the Frank-GARCH models provide most conservative risk forecasts and out-perform all rival models

The evolution of tangibles, financial and social security wealth over the lifecycle: estimates for Germany

"Using survey and administrative micro data, the authors describe the wealth distribution in Germany between 1978 and 2003, focusing on the birth cohort 1939 to 1953 resident in West Germany. Estimates are provided for three types of wealth, financial wealth, real wealth and social security wealth, i.e. the number of accumulated earning points in Germany's public pension insurance. While financial and real wealth are rather unequally distributed, inequality in accumulated earning points is substantially lower, indicating that Germany's pay-as-you-go pension system plays a prominent role in mitigating the inequality in overall wealth after retirement." (author's abstract

Neonatal Gram Negative and Candida Sepsis Survival and Neurodevelopmental Outcome at the Corrected Age of 24 Months

Objectives: To evaluate the long term neurodevelopmental outcome of premature infants exposed to either gram- negative sepsis (GNS) or neonatal Candida sepsis (NCS), and to compare their outcome with premature infants without sepsis. Methods: Historical cohort study in a population of infants born at <30 weeks gestation and admitted to the Neonatal Intensive Care Unit (NICU) of the Academic Medical Center in Amsterdam during the period 1997-2007. Outcome of infants exposed to GNS or NCS and 120 randomly chosen uncomplicated controls (UC) from the same NICU were compared. Clinical data during hospitalization and neurodevelopmental outcome data (clinical neurological status; Bayley -test results and vision/hearing test results) at the corrected age of 24 months were collected. An association model with sepsis as the central determinant of either good or adverse outcome (death or severe developmental delay) was made, corrected for confounders using multiple logistic regression analysis. Results: Of 1362 patients, 55 suffered from GNS and 29 suffered from NCS; cumulative incidence 4.2% and 2.2%, respectively. During the follow-up period the mortality rate was 34% for both GNS and NCS and 5% for UC. The adjusted Odds Ratio (OR) [95% CI] for adverse outcome in the GNS group compared to the NCS group was 1.4 [0.4-4.9]. The adjusted ORs [95% CI] for adverse outcome in the GNS and NCS groups compared to the UC group were 4.8 [1.5-15.9] and 3.2 [0.7-14.7], respectively. Conclusions: We found no statistically significant difference in outcome at the corrected age of 24 months between neonatal GNS and NCS cases. Suffering from either gram -negative or Candida sepsis increased the odds for adverse outcome compared with an uncomplicated neonatal period