Endogenous Market Incompleteness Without Market Frictions: Dynamic Suboptimality of Competitive Equilibrium in Multiperiod Overlapping Generations Economies

In this paper, we show that within the set of stochastic three-period-lived OLG economies with productive assets (such as land), markets are necessarily sequentially incomplete, and agents in the model do not share risk optimally. We start by characterizing perfect risk sharing and find that it requires a state-dependent consumption claims which depend only on the exogenous shock realizations. We show then that the recursive competitive equilibrium of any overlapping generations economy with weakly more than three generations is not strongly stationary. This then allows us to show directly that there are short-run Pareto improvements possible in terms of risk-sharing and hence, that the recursive competitive equilibrium is not Pareto optimal. We then show that a financial reform which eliminates the equity asset and replaces it with zero net supply insurance contracts (Arrow securities) will implement to Pareto optimal stochastic steady-state known to exist in the model. Finally, we also show via numerical simulations that a system of government taxes and transfers can lead to a Pareto improvement over the competitive equilibrium in the model.

Imbalances For the Long Run

Net exports and current account balances among developed countries, which contributed to the so called “global imbalances”, are highly persistent. Despite success along many dimensions, international business cycle models have difficulty replicating these salient, low-frequency features of international capital flows. In particular, net exports and current account balances are much more persistent in the data than in standard models. We document these important empirical facts about international capital flows. Further, we show that we can account for them with a parsimonious one-good two-country model with small, persistent differences in per capita GDP growth, matching those we observe among developed countries

The High Cross-Country Correlations of Prices and Interest Rates

We introduce financial frictions in a two sector model of international trade with heterogeneous agents. The level of specialization in the economy (economic development) depends on the quality of financial institutions. Underdeveloped financial markets prohibit an economy to specialize in sectors where finance is important. Capital flows and international trade are complements when countries differ in the degree of development of their financial sectors. Capital flows to countries with more robust financial institutions which in turn allow their economies to develop sectors that are financially dependent.trade flows, capital flows, financial frictions, economic development.

Rollespill og Teaching Thinking som redskaper for aktiv læring i naturfag – erfaringer fra allmennlærerutdanninga

Teaching Thinking (teaching strategies developed by Thinking Skills Research Group, University of Newcastle) and role play were used in a science course at a teacher's college and evaluated by the students. The experiences are discussed with reference to democratic participation as the most important aim for compulsory science education. It is argued that role play and Teaching Thinking-strategies give students and pupils in science classes motivation and opportunities to communicate on science issues at their own skill level. This kind of communication has several merits: i) It reveals some of the students' alternative conceptions; ii) it enforces content learning; and iii) it supports the development of skills needed for democratic participation

Globally Correlated Nominal Fluctuations

Cyclical fluctuations in nominal variables—aggregate price levels and nominal interest rates—are documented to be substantially more synchronized across countries than cyclical fluctuations in real output. A transparent mechanism that can account for this striking feature of the nominal environment is highlighted. It is based on (small) cross-country spillovers of shocks and an interaction between Taylor rules and no-arbitrage conditions. The mechanism is quantitatively important for a wide range of plausible parameterizations and is found to be robust to modifications of the economic environment that help account for other important features of domestic and international aggregate fluctuations.

Current Account Fact and Fiction

With US trade and current account deficits approaching 6% of GDP, some have argued that the country is "on the comfortable path to ruin" and that the required "adjustment'' may be painful. We suggest instead that things are fine: although national saving is low, the ratios of household and consolidated net worth to GDP remain high. In our view, the most striking features of the world at present are the low rates of investment and growth in some of the richest countries, whose surpluses account for about half of the US deficit. The result is that financial capital is flowing out of countries with low investment and growth and into the US and other fast-growing countries. Oil exporters account for much of the rest.

The High Cross-Country Correlations of Prices and Interest Rates

We document that, at business cycle frequencies, fluctuations in nominal variables, such as aggregate price levels and nominal interest rates, are substantially more synchronized across countries than fluctuations in real output. To the extent that domestic nominal variables are determined by domestic monetary policy, and central banks generally attempt to keep the domestic nominal environment stable, this might seem surprising. We ask if a parsimonious international business cycle model can account for this aspect of cross-country aggregate fluctuations. It can. Due to spillovers of technology shocks across countries, expected future responses of national central banks to fluctuations in domestic output and inflation generate movements in current prices and interest rates that are synchronized across countries even when output is not. Even modest spillovers produce cross-country correlations such as those in the data

Inflammatory bowel disease in South-Eastern Norway III (IBSEN III): a new population-based inception cohort study from South-Eastern Norway

Background and aim: Modern treatment strategies for inflammatory bowel disease (IBD) are postulated to change the natural disease course. Inception cohort studies are the gold standard for investigating such changes. We have initiated a new population-based inception cohort study; Inflammatory bowel disease in South Eastern Norway III (IBSEN III). In this article, we describe the study protocol and baseline characteristics of the cohort. Methods: IBSEN III is an ongoing, population-based observational inception cohort study with prospective follow-up. Adult and pediatric patients with suspected IBD in the South-Eastern Health Region of Norway (catchment area of 2.95 million inhabitants in 2017), during the 3-year period from 2017 to 2019, were eligible for inclusion. Comprehensive clinical, biochemical, endoscopic, demographic, and patient-reported data were collected at the time of diagnosis and throughout standardized follow-up. For a portion of the patients, extensive biological material was biobanked. Results: The study included 2168 patients, of whom 1779 were diagnosed with IBD (Crohn's disease: 626, ulcerative colitis: 1082, IBD unclassified: 71). In 124 patients, there were subtle findings indicative of, but not diagnostic for, IBD. The remaining 265 patients were classified as symptomatic non-IBD controls. Conclusion: We have included patients in a comprehensive population-based IBD cohort from a catchment population of 2.95 million, and a unique biobank with materials from newly diagnosed and treatment-naïve IBD patients and symptomatic non-IBD controls. We believe this cohort will add important knowledge about IBD in the years to come.publishedVersio

Valuing target redemption notes by a stratified Longstaff Schwartz algorithm

A great challenge using the traditional regression based Bermuda option valuation based on Longstaff and Schwartz (LS) (see Longstaff and Schwartz [10]) is the stability of solutions for different basis functions. In this paper we develop an alternative method in the spirit of LS which is less challenging with respect to proper choice of basis functions. The method also makes it possible to quantify the probability of exercise at future nodes in a Bermuda option when moving backward in time. We will apply the method to valuation of target redemption notes with early exercise features under stochastic interest rates based on a LIBOR market model