The yield spread and GDP growth - Time Varying Leading Properties and the Role of Monetary Policy

The yield spread is a well documented leading indicator of GDP growth. Estrella (2005) proposes a model to explain this relationship. Within the model, the leading properties of the yield spread are determined by the monetary policy. Accordingly, changes of the leading properties that have been reported in many studies should correspond to changes of the monetary policy. This paper analyzes whether and what form of time variation of the leading properties can be found in four major industrialized countries (France, Germany, the UK and the US). The results are connected with time varying behavior of the monetary policy by modeling a joint state dependency of the leading properties and the reaction parameters of the monetary policy. Time variation of the leading properties seem to exist in all countries under consideration. For the US and Germany they are best modeled as a structural break while France and the UK exhibit recurring phases. Evidence for a link between the time variations of the monetary policy and the leading properties can be found. However, a clear determination of the leading properties by the monetary policy cannot be confirmed. --leading indicator,yield spread,GDP growth,monetary policy,Markov-Switching

Break up the band: Laparoscopic Adjustable Gastric Banding-associated Discitis and Osteomyelitis

Obesity is an epidemic that adversely affects millions of Americans. In 2017, the Center for Disease Control and Prevention reported that 93.3 million Americans suffer from obesity.1 Many individuals have undergone laparoscopic adjustable gastric banding (LAGB) procedures in order to lose weight. The procedure is thought to be safe with complication rates reported as low as 1.6% following surgery.2 We present a case of LAGB-associated discitis and osteomyelitis 20 years after placement and examine the current literature on the complication rates of bariatric surgery along with the rare injuries following LAGB placement

Finite state machine based SDL

No abstract available

A bayesian approach to model-based clustering for panel probit models

Consideration of latent heterogeneity is of special importance in non linear models for gauging correctly the effect of explaining variables on the dependent variable. This paper adopts the stratified model-based clustering approach for modeling latent heterogeneity for panel probit models. Within a Bayesian framework an estimation algorithm dealing with the inherent label switching problem is provided. Determination of the number of clusters is based on the marginal likelihood and out-of-sample criteria. The ability to decide on the correct number of clusters is assessed within a simulation study indicating high accuracy for both approaches. Different concepts of marginal effects incorporating latent heterogeneity at different degrees arise within the considered model setup and are directly at hand within Bayesian estimation via MCMC methodology. An empirical illustration of the developed methodology indicates that consideration of latent heterogeneity via latent clusters provides the preferred model specification compared to a pooled and a random coefficient specification. --Bayesian Estimation,MCMC Methods,Panel Probit Model,Mixture Modelling

The Decline in German Output Volatility: A Bayesian Analysis

Empirical evidence suggests a sharp volatility decline of the growth in U.S. gross domestic product (GDP) in the mid-1980s. Using Bayesian methods, we analyze whether a volatility reduction can also be detected for the German GDP. Since statistical inference for volatility processes critically depends on the specification of the conditional mean we assume for our volatility analysis different time series models for GDP growth. We find across all specifications evidence for an output stabilization around 1993, after the downturn following the boom associated with the German reunification. However, the different GDP models lead to alternative characterizations of this stabilization : In a linear AR model it shows up as smaller shocks hitting the economy, while regime switching models reveal as further sources for a stabilization, a narrowing gap between growth rates during booms and recessions or flatter trajectories characterizing the GDP growth rates. Furthermore, it appears that the reunification interrupted an output stabilization emerging already around 1987. --business cycle models,Gibbs sampling,Markov Chain Monte Carlo,regime switching,structural breaks

Arkansas Incident, 1924

THE night air, heavy now that dew covered the grass, pressed into the house without moving the curtains..

Readdressing the trade effect of the Euro: Allowing for currency misalignment

We know that euro-area member countries have absorbed asymmetric shocks in ways that are inconsistent with a common nominal anchor. Based on a reformulation of the gravity model that allows for such bilateral misalignment, we disentangle the conventional trade cost channel and trade effects deriving from 'implicit currency misalignment'. Econometric estimation reveals that the currency misalignment channel exerts a significant trade effect on bilateral exports. We retrieve country specific estimates of the euro effect on trade based on misalignment. This reveals asymmetric trade effects and heterogeneous outlooks across countries for the costs and benefits from adopting the euro. --Euro,gravity model,exchange rates,purchasing power parity,trade imbalances

Offshoring and relative labor demand from a task perspective

This paper provides new evidence on how offshoring shifts relative labor demand for tasks at the industry level. A novel theoretical mechanism, based on sorting of heterogeneous workers into occupations with task dependent offshoring cost, guides estimation. Cost shares of tasks are linked to offshoring in a panel estimation using German data for 1998-2007. It is shown that offshoring shifts home country relative labor demand towards more complex tasks with higher relocation cost. This demand shift holds when controlling for an industry’s skill composition and is particularly strong for offshoring to non-OECD countries