The Term Structure of Euromarket Interest Rates: An Empirical Investigation

This paper is an empirical investigation of the predictability and comovement of risk premia in the term structure of Euromarket interest rates. We show that variables which have been used as proxies for risk premia on uncovered foreign asset positions also predict excess returns in Euroniarket term structures, while variables which have been used as proxies for risk premia in the term structure also predict excess returns on taking uncovered foreign asset positions. These findings suggests that risk premia in the Euromarket term structures and on uncovered foreign asset positions move together. We test formally the hypothesis that risk premia on uncovered 3-month EuroDM and Eurosterling deposits move in proportion to a single latent variable. We are unable to reject this hypothesis. We are also unable to reject the hypothesis that the risk premia on these three strategies and those on rolling over 1-month Eurosterling (EuroDM) deposits versus holding a 3-month Eurosterlirig (EuroDN) deposit move in proportion to a single latent variable. The single latent variable model can be interpreted atheoretically, as a way of characterizing the extent to which predictable asset returns "move together"; or it can be interpreted as in Hansen and Hodrick (1983) and Hodrick and Srivastava (1983) as a specialization of the ICAPM in which assets have constant betas on a single, unobservable benchmark portfolio.

Household Saving and Permanent Income in Canada and the United Kingdom

Recent theoretical research in open-economy macroeconomics has emphasized the connection between a country's current account and the intertemporal savings and investment choices of its households, firms, and governments. In this paper, we assess the empirical relevance of the permanent income theory of household saving, a key building block of recent theoretical models of the current account. Using the econometric approach of Campbell (1987), we are able to reject the theory on quarterly aggregate data in Canada and the United Kingdom. However, we also assess the economic significance of these statistical rejections by comparing the behavior of saving with that of an unrestricted vector autoregressive (VAR) forecast of future changes in disposable labor income. If the theory is true, saving should be the best available predictor of future changes in disposable labor income. We find the correlation between saving and the unrestricted VAR forecast to be extremely high in both countries. The results suggest that the theory provides a useful description of the dynamic behavior of household saving in Canada and Britain.

The Dollar and Real Interest Rates

In this paper, we investigate the link between the real foreign exchange value of the dollar and real interest rates since 1979. We argue that it is important to consider the possibility that real exchange rate movements reflect movements of the long-run equilibrium exchange rate as well as real interest differentials. We use a state-space approach to estimate the importance of shifts in the long-run equilibrium exchange rate, the persistence of the ex ante short-term real interest differential, and the effect of this differential on the exchange rate. Using U.S., Canadian, British, German and Japanese data from October 1979 to March 1986, we find that movements in the dollar real exchange rate have been dominated by unanticipated shifts in the expected long-run real exchange rate. Ex ante real interest differentials have not been persistent or variable enough to account for a major part of exchange rate variation. We use Mussa's (1984) rational expectations model of the real exchange rate and the current account to interpret our results.

A Political Process That Worked: Comprehensive Healthcare Reform in Progress

The final report of the Maine Health Care Reform Commission (MHCRC) was submitted to Governor Angus King in November, 1995. Given the complexity of what we call the healthcare system as well as the moving targets of federal and state incentives for reform, the report accomplished a great deal in a short period of time. Commission members were mandated to offer a single payer universal coverage bill, a multiple payer universal coverage bill, and a bill to achieve reform through incremental changes to the existing system, emphasizing cost containment, managed care, and improved access. The commission was also mandated to cost out its recommendations Reactions to the MHCRC report were invited from individuals who represent constituencies which often have an influential role in healthcare. Five commentaries address pros and cons of particular elements of the commission’s report. In this third commentary, state Representative Richard Campbell comments on the development, process, and outcomes of the Commission

A Political Process That Worked: Comprehensive Healthcare Reform in Progress

The final report of the Maine Health Care Reform Commission (MHCRC) was submitted to Governor Angus King in November, 1995. Given the complexity of what we call the healthcare system as well as the moving targets of federal and state incentives for reform, the report accomplished a great deal in a short period of time. Commission members were mandated to offer a single payer universal coverage bill, a multiple payer universal coverage bill, and a bill to achieve reform through incremental changes to the existing system, emphasizing cost containment, managed care, and improved access. The commission was also mandated to cost out its recommendations Reactions to the MHCRC report were invited from individuals who represent constituencies which often have an influential role in healthcare. Five commentaries address pros and cons of particular elements of the commission’s report. In this third commentary, state Representative Richard Campbell comments on the development, process, and outcomes of the Commission

Interaction of sine-Gordon kinks with defects: The two-bounce resonance

A model of soliton-defect interactions in the sine-Gordon equations is studied using singular perturbation theory. Melnikov theory is used to derive a critical velocity for strong interactions, which is shown to be exponentially small for weak defects. Matched asymptotic expansions for nearly heteroclinic orbits are constructed for the initial value problem, which are then used to derive analytical formulas for the locations of the well known two- and three-bounce resonance windows, as well as several other phenomena seen in numerical simulations.Comment: 26 pages, 17 figure

The Term Structure of Euromarket Interest Rates: An Empirical Investigation

This paper is an empirical investigation of the predictability and co-movement of risk premia in the term structure of Euromarket interest rates. We present regression results which suggest that risk premia in three Euromarket term structures and on uncovered foreign asset positions move together. We test formally the hypothesis that these risk premia move in proportion to a single latent variable. We are unable to reject this hypothesis. The single latent variable model can be interpreted as in Hansen and Hodrick (1983) and Hodrick and Srivastava (1984) as a specialization of the ICAPM in which assets have constant betas on a single, unobservable benchmark portfolio.Economic

The Term Structure of Euromarket Interest Rates: An Empirical Investigation

This paper is an empirical investigation of the predictability and comovement of risk premia in the term structure of Euromarket interest rates. We show that variables which have been used as proxies for risk premia on uncovered foreign asset positions also predict excess returns in Euromarket term structures, while variables which have been used as proxies for risk premia in the term structure also predict excess returns on taking uncovered foreign asset positions. These findings suggest that risk premia move together. We test formally the hypothesis that risk premia on uncovered 3-month EuroDM and Eurosterling deposits move in proportion to a single latent variable. We are unable to reject this hypothesis. We are also unable to reject the hypothesis that the risk premia on these three strategies and those on rolling over 1-month Eurosterling (EuroDM) deposit move in proportion to a single latent variable. The single latent variable model can be interpreted atheoretically, as a way of characterizing the extent to which predictable asset returns “move together”; or it can be interpreted as in Hansen and Hodrick (1983) and Hodrick and Srivastava (1983) as a specialization of the ICAPM in which assets have constant betas on a single, unobservable benchmark portfolio

Social Support Needs of Minority Breast Cancer Patients: Significance of Racial Homogeneity and Kin Composition of Social Networks

Social support from family and friends assists breast cancer patients navigate a life crisis, but more needs to be understood about specific social network characteristics that can benefit breast cancer patients. To address this need, the primary aim of this study was to identify social network factors that facilitate or reduce social support. Given racially patterned gaps in social support among breast cancer patients, a secondary goal was to identify network characteristics that are linked to gaps in support. We examined these research questions using data from a sample of 915 breast cancer patients (NHWhite=373; NHBlack=377; Hispanic=165) and 4,021 of their network members. To improve on prior research, we collected detailed social network data using a personal-network measurement tool and assessed needed and received support on five support components. Study findings identified specific network characteristics that facilitate these social support components. Network size was associated with increased practical, informational, emotional, and spiritual support. Network density was associated with increased practical support. Racial homogeneity in networks were associated with reduced informational support while a higher number of daughters in support networks was associated with increased emotional support. Compared to NHWhite patients, NHBlack patients were more likely to experience inadequate practical and financial support. Additionally, compared to NHWhite patients, Hispanic patients were more likely to experience inadequate informational and emotional support. The study found that network density, racial homogeneity, and gender composition of NHWhite, NHBlack and Hispanic social networks contributed to the racially patterned disparities in social support. Findings in this study could inform interventions aimed at increasing social support through greater mobilization of existing network ties as well as policy-driven, formal community building initiatives aimed at replicating benefits of naturally occurring networks