Unlikely Estimates of the Ex Ante Real Interest Rate: Another Dismal Performance from the Dismal Science1

The ex ante real rate of interest is one of the most important concepts in economics and finance. Because the universally-used Fisher theory of interest requires positive ex ante real interest rates, empirical estimates of the ex ante real interest rate derived from the Fisher theory of interest should also be positive. Unfortunately, virtually all estimates of the ex ante real interest rate published in economic journals and textbooks or used in macroeconomic models and policy discussions for the past 35 years contain negative values for extended time periods and, thus, are theoretically flawed. Moreover, the procedures generally used to estimate ex ante real interest rates were shown to produce biased estimates of the ex ante real rate over 30 years ago. In this article, we document this puzzling chasm between the Fisherian theory that mandates positive ex ante real interest rates and the practice of macroeconomists who generate and use ex ante real interest rate estimates that violate this theory. We explore the reasons that this problem exists and assess some alternative approaches for estimating the ex ante real interest rate to determine whether they might resolve this problem.ex ante real interest rate, Fisher theory of interest, biased real interest rate estimates

Navigating through the interest rate morass: some basic principles

Interest rates

What really happened to interest rates? a longer-run analysis

Interest rates

The Fed and the real rate of interest

Federal funds rate ; Interest rates

Are preliminary week-to-week fluctuations in M1 biased?

Money supply ; Monetary policy

Are monetarists an endangered species?

Monetary policy

Would lower federal deficits increase U.S. farm exports?

Agriculture ; Exports

Solving the 1980s' velocity puzzle: a progress report

Money supply ; Velocity of money

The epidemiology of canine leishmaniasis: transmission rates estimated from a cohort study in Amazonian Brazil

We estimate the incidence rate, serological conversion rate and basic case reproduction number (R0) of Leishmania infantum from a cohort study of 126 domestic dogs exposed to natural infection rates over 2 years on Marajó Island, Pará State, Brazil. The analysis includes new methods for (1) determining the number of seropositives in cross-sectional serological data, (2) identifying seroconversions in longitudinal studies, based on both the number of antibody units and their rate of change through time, (3) estimating incidence and serological pre-patent periods and (4) calculating R0 for a potentially fatal, vector-borne disease under seasonal transmission. Longitudinal and cross-sectional serological (ELISA) analyses gave similar estimates of the proportion of dogs positive. However, longitudinal analysis allowed the calculation of pre-patent periods, and hence the more accurate estimation of incidence: an infection–conversion model fitted by maximum likelihood to serological data yielded seasonally varying per capita incidence rates with a mean of 8·66×10[minus sign]3/day (mean time to infection 115 days, 95% C.L. 107–126 days), and a median pre-patent period of 94 (95% C.L. 82–111) days. These results were used in conjunction with theory and dog demographic data to estimate the basic reproduction number, R0, as 5·9 (95% C.L. 4·4–7·4). R0 is a determinant of the scale of the leishmaniasis control problem, and we comment on the options for control

Infectiousness in a Cohort of Brazilian Dogs: Why Culling Fails to Control Visceral Leishmaniasis in Areas of High Transmission

The elimination of seropositive dogs in Brazil has been used to control zoonotic visceral leishmaniasis but with little success. To elucidate the reasons for this, the infectiousness of 50 sentinel dogs exposed to natural Leishmania chagasi infection was assessed through time by xenodiagnosis with the sandfly vector, Lutzomyia longipalpis. Eighteen (43%) of 42 infected dogs became infectious after a median of 333 days in the field (105 days after seroconversion). Seven highly infectious dogs (17%) accounted for >80% of sandfly infections. There were positive correlations between infectiousness and anti-Leishmania immunoglobulin G, parasite detection by polymerase chain reaction, and clinical disease (logistic regression, r2 = 0.080.18). The sensitivity of enzyme-linked immunosorbent assay to detect currently infectious dogs was high (96%) but lower in the latent period (<63%), and specificity was low (24%). Mathematical modeling suggests that culling programs fail because of high incidence of infection and infectiousness, the insensitivity of the diagnostic test to detect infectious dogs, and time delays between diagnosis and culling