CDS as Insurance: Leaky Lifeboats in Stormy Seas

In this paper we update the traditional insurance economics framework to incorporate key features of the credit default swap (CDS) market. First, we allow for insurer insolvency, with asymmetric information as to its probability. We find that stable insurers become less stable because they are forced to compete on price. When insurer type is known, increased competition among insurers can create instability for the same reason. Second, we allow the insured party to have heterogeneous motivations for purchasing CDS. For example, some may own the underlying asset and purchase CDS for risk management, while others buy these contracts purely for speculation. We show that speculators will choose to contract with less stable insurers, resulting in higher counterparty risk in this market relative to that of traditional insurance; however, a regulatory policy that disallows speculative trading can, perversely, cause market counterparty risk to increase. Third, we relax the standard assumption of contract exclusivity, which does not apply to the CDS market, by allowing the insured to purchase contracts from many insurers. In contrast to the traditional insurance model, we show that separation of risk type among insured parties can be achieved through insurer choice. We use our model to shed light on the debate over Central Counterparties (CCP). We show that requiring CDS contracts to be negotiated through CCPs can push stable insurers out of the market, mitigating the benefi t of risk pooling.credit default swaps; insurance; counterparty risk; banking; regulation

Will electricity deregulation push inflation lower?

Deregulation of electricity generation will offer consumers many advantages, including dramatically lower energy costs. From a macroeconomic viewpoint, electricity purchases are interesting because they are a major component of consumers’ budgets (and thus of the CPI) and a large factor of production for many companies. This raises the possibility that electricity deregulation could create a substantial shock to the overall price trend, comparable to other recent energy shocks. The benefits to consumers and producers identified in this article strongly support legislative efforts to increase competition in one of the last strongholds of regulated profits.Electric utilities ; Inflation (Finance)

An investigation of the role of background music in IVWs for learning

Empirical evidence is needed to corroborate the intuitions of gamers and game developers in understanding the benefits of Immersive Virtual Worlds (IVWs) as a learning environment and the role that music plays within these environments. We report an investigation to determine if background music of the genre typically found in computer‐based role‐playing games has an effect on learning in a computer‐animated history lesson about the Macquarie Lighthouse within an IVW. In Experiment 1, music stimuli were created from four different computer game soundtracks. Seventy‐two undergraduate students watched the presentation and completed a survey including biographical details, questions on the historical material presented and questions relating to their perceived level of immersion. While the tempo and pitch of the music was unrelated to learning, music conditions resulted in a higher number of accurately remembered facts than the no music condition. One soundtrack showed a statistically significant improvement in memorisation of facts over other music conditions. Also an interaction between the levels of perceived immersion and ability to accurately remember facts was observed. Experiment 2, involving 48 undergraduate students, further investigated the effect of music, sense of immersion and how different display systems affect memory for facts

Epidemiological surveillance methods for vector-borne diseases

Compared with many other diseases, the ever-increasing threat of vectorborne diseases (VBDs) represents a great challenge to public and animal health managers. Complex life cycles, changing distribution ranges, a variety of potential vectors and hosts, and the possible role of reservoirs make surveillance for VBDs a grave concern in a changing environment with increasing economic constraints. Surveillance activities may have various specific objectives and may focus on clinical disease, pathogens, vectors, hosts and/or reservoirs, but ultimately such activities should improve our ability to predict, prevent and/or control the diseases concerned. This paper briefly reviews existing and newly developed tools for the surveillance of VBDs. A range of examples, by no means exhaustive, illustrates that VBD surveillance usually involves a combination of methods to achieve its aims, and is best accomplished when these techniques are adapted to the specific environment and constraints of the region. More so than any other diseases, VBDs respect no administrative boundaries; in addition, animal, human and commodity movements are increasing dramatically, with illegal or unknown movements difficult to quantify. Vector-borne disease surveillance therefore becomes a serious issue for local and national organisations and is being conducted more and more at the regional and international level through multidisciplinary networks. With economic and logistical constraints, tools for optimising and evaluating the performance of surveillance systems are essential and examples of recent developments in this area are included. The continuous development of mapping, analytical and modelling tools provides us with an enhanced ability to interpret, visualise and communicate surveillance results. This review also demonstrates the importance of the link between surveillance and research, with interactions and benefits in both directions. (Résumé d'auteur

Trunk motion visual feedback during walking improves dynamic balance in older adults: Assessor blinded randomized controlled trial.

BACKGROUND: Virtual reality and augmented feedback have become more prevalent as training methods to improve balance. Few reports exist on the benefits of providing trunk motion visual feedback (VFB) during treadmill walking, and most of those reports only describe within session changes. RESEARCH QUESTION: To determine whether trunk motion VFB treadmill walking would improve over-ground balance for older adults with self-reported balance problems. METHODS: 40 adults (75.8 years (SD 6.5)) with self-reported balance difficulties or a history of falling were randomized to a control or experimental group. Everyone walked on a treadmill at a comfortable speed 3×/week for 4 weeks in 2 min bouts separated by a seated rest. The control group was instructed to look at a stationary bulls-eye target while the experimental group also saw a moving cursor superimposed on the stationary bulls-eye that represented VFB of their walking trunk motion. The experimental group was instructed to keep the cursor in the center of the bulls-eye. Somatosensory (monofilaments and joint position testing) and vestibular function (canal specific clinical head impulses) was evaluated prior to intervention. Balance and mobility were tested before and after the intervention using Berg Balance Test, BESTest, mini-BESTest, and Six Minute Walk. RESULTS: There were no significant differences between groups before the intervention. The experimental group significantly improved on the BESTest (p = 0.031) and the mini-BEST (p = 0.019). The control group did not improve significantly on any measure. Individuals with more profound sensory impairments had a larger improvement on dynamic balance subtests of the BESTest. SIGNIFICANCE: Older adults with self-reported balance problems improve their dynamic balance after training using trunk motion VFB treadmill walking. Individuals with worse sensory function may benefit more from trunk motion VFB during walking than individuals with intact sensory function

Amenities, local conditions and fiscal determinants of factor growth in rural America

This paper examines how amenities, asset indicators, and fiscal factors influence the growth in factors of production from 1972 to 1999 in the 466 non-metropolitan labor market areas in the continental United States. In developing our model of non-metropolitan factor markets, we combine the emphasis of Brown et al. (2003) on the affect of taxes and public expenditure policy on labor and capital formation with the emphasis of Beeson et al. (2001) on the importance of climate and natural features on localized population growth. We develop our own measure of capital stock in non-metropolitan areas using data from the Census of Manufacturing for 1967, 1972, 1977, 1982, 1987, and 1992. Results indicate that local taxes discourage both employment growth and manufacturing capital formation, but that local public infrastructure investment and the level of local entrepreneurship encourages employment growth. Amenities such as a favorable climate and the presence of surface water encourage the growth of employment, and greater local wealth, as measured by dividend, interest, and rent income, encourages the formation of manufacturing capital stock. Results fail to support an “export base” approach for rural economies where greater manufacturing capital stock encourages greater employment in a region.Rural areas ; Rural development