The International Wealth Effect: A Global Error-Correcting Analysis

This paper analyzes the empirical link between asset prices, consumption and the trade balance using a global macroeconometric model developed by Pesaran, Schuermann, and Weiner (2004). The model is estimated for 29 countries with quarterly data over the period 1981Q1 - 2006Q4. Motivated by increasing international financial and real integration, and pronounced cycles in stock and housing prices, we employ generalized impulse response functions for a group of five of the world''s most industrialized countries and show that shocks to asset prices transmit into consumption decisions and subsequently into the trade balance. We refer to this transmission channel as the international wealth effect and find it to be present in the US, UK and, to a lesser extent, in France, but absent in Japan and Germany.macroeconomics ;

The Impact of International Portfolio Composition on Consumption Risk Sharing

Recent empirical work has shown that ongoing international financial integration facilitates cross-country consumption risk-sharing. These studies typically find that countries with high equity home bias exhibit relatively low international consumption risk sharing. We extend this line of research and demonstrate that it is not only a country's equity home bias that prevents consumption risk sharing. In addition, the composition of a country's foreign asset portfolio plays an important role. Using panel-data regression for a group of OECD countries over the period 1980-2007, we show that foreign investment bias has additional explanatory power for consumption risk sharing.international financial integration, foreign investment bias, geography of international investment, equity home bias, international portfolio diversification

Taking Home Bias Seriously: Absolute and Relative Measures Explaining Consumption Risk-Sharing

Recent empirical work has shown that ongoing international financial integration facilitates cross-country consumption risk-sharing. While these studies typically employ absolutemeasures to account for a country''s integration in international capital markets, we devise a relative measure that is motivated by the International Capital Asset Pricing Model (I-CAPM) literature. Our measure captures the composition of a country''s international portfolio relative to the world portfolio, which all countries should optimally hold according to the I-CAPM. Using panel-data regression for a group of OECD countries during the financial globalization period 1980-2007, we show that the geography of international portfolioshelps to explain the degree of consumption risk-sharing obtained.macroeconomics ;

International Portfolio Balance – Modeling the External Adjustment Process

Unprecedented growth in private cross-border asset trade and asymmetric internationalbalance sheets are well-documented stylized facts of financial integration. Moreover, weobserve that current accounts are no longer the number one determinant of external balances. Advancing the work of Blanchard et al. (2005), this paper develops a portfolio-balance model that recognizes these stylized facts and shows how they influence the joint dynamics of the current account, the exchange rate and relative asset prices. Calibrating the model to the external adjustment process of the US, the model produces results that are broadly consistent with recent empirical trends. In particular, we find that the composition of its international balance sheet helps the US to better cope with external shocks.international economics and trade ;

Origins of persistent macroeconomic imbalances in the Euro area

In this paper we document the growing dispersion of external and internal balances between countries in the North and South of the Euro area over the time period 1992 to 2007. We find a persistent divergence process that seems to have started with the introduction of the common currency and has its roots in the savings and investment behavior of private sectors. We dismiss the common argument in the literature that imbalances are the temporary outcome of an overall European economic convergence process and argue that future research should place greater emphasis on country heterogeneity in behavior to fully understand economic developments in the Euro area and to derive policy implications.macroeconomics ;

Persistent macroeconomic imbalances in the Euro area: causes and consequences

In this paper, the authors document a growing divergence between current account imbalances in northern and southern euro area countries from 1992 to 2007. The imbalance occurred without a concomitant rise in productivity and growth in the southern (deficit) countries. The authors argue that systematic monitoring of external imbalances and implementation of better coordinated policies to prevent the emergence of unsustainably large imbalances in the euro area is advisable because (i) country heterogeneity and the absence of optimal currency area characteristics may lead to the emergence of large cur- rent account imbalances without automatic gains in productivity and economic growth to sustain these imbalances, (ii) the absence of sufficient market-based adjustment mechanisms substantially increases the costs of ultimate adjustment toward more sustainable current account positions, and (iii) large external imbalances—particularly through the major role of the banking system—potentially have strong negative consequences for fiscal policy.Balance of payments ; Macroeconomics ; European Union countries

Origins of persistent macroeconomic imbalances in the Euro area

In this paper we document the growing dispersion of external and internal balances between countries in the North and South of the Euro area over the time period 1992 to 2007. We find a persistent divergence process that seems to have started with the introduction of the common currency and has its roots in the savings and investment behavior of private sectors. We dismiss the common argument in the literature that imbalances are the temporary outcome of an overall European economic convergence process and argue that future research should place greater emphasis on country heterogeneity in behavior to fully understand economic developments in the Euro area and to derive policy implications.Euro area, current acccount imbalances, Stability and Growth Pact

Association between TAS2R38 gene polymorphisms and colorectal cancer risk

Molecular sensing in the lingual mucosa and in the gastro-intestinal tract play a role in the detection of ingested harmful drugs and toxins. Therefore, genetic polymorphisms affecting the capability of initiating these responses may be critical for the subsequent efficiency of avoiding and/or eliminating possible threats to the organism. By using a tagging approach in the region of Taste Receptor 2R38 (TAS2R38) gene, we investigated all the common genetic variation of this gene region in relation to colorectal cancer risk with a case-control study in a German population (709 controls and 602 cases) and in a Czech population (623 controls and 601 cases). We found that there were no significant associations between individual SNPs of the TAS2R38 gene and colorectal cancer in the Czech or in the German population, nor in the joint analysis. However, when we analyzed the diplotypes and the phenotypes we found that the non-taster group had an increased risk of colorectal cancer in comparison to the taster group. This association was borderline significant in the Czech population, (OR = 1.28, 95% CI 0.99-1.67; P(value) = 0.058) and statistically significant in the German population (OR = 1.36, 95% CI 1.06-1.75; P(value) = 0.016) and in the joint analysis (OR = 1.34, 95% CI 1.12-1.61; P(value) = 0.001). In conclusion, we found a suggestive association between the human bitter tasting phenotype and the risk of CRC in two different populations of Caucasian origin

Early detection of duodenal cancer by upper gastrointestinal-endoscopy in Lynch syndrome

Small bowel cancer (SBC) is the malignancy with the highest standardized incidence ratio in Lynch syndrome (LS) patients. Of all SBCs, about 50% are duodenal cancers (DCs), therefore being accessible by esophago-gastro-duodenoscopy (EGD) for surveillance. We asked whether early detection of DC is possible for LS patients undergoing surveillance by EGD and if surveillance should be limited to specific subgroups. Data for LS patients with DC were retrieved from the registry of the German Consortium for Familial Intestinal Cancer. Patients undergoing active surveillance by EGDs (surveillance group) were compared to those who did not (nonsurveillance group) regarding tumor stage at diagnosis. Union for International Cancer Control stages I-IIA were defined as early stage disease and IIB-IV as advanced stage disease. Statistical analysis was performed using Fisher's exact test. Among 2015 patients with pathogenic variants in any mismatch-repair-gene, 47 patients with 49 DCs were identified. In 10% of cases, patients were under 35 years at diagnosis; family and personal tumor history did not correlate with DC diagnosis. Pathogenic germline variants in MSH6, PMS2 or EPCAM were present in 10% of patients. Statistical analysis could be performed on 13 DC patients in the surveillance group and 14 in the nonsurveillance group. Early detection was possible for 71% of patients in the surveillance group and 29% of patients in the nonsurveillance group (P = .021). Early detection of DC by EGD in LS patients is feasible regardless of family history, mutational status and should start no later than 25 years of age

Value of upper gastrointestinal endoscopy for gastric cancer surveillance in patients with Lynch syndrome

In our study, we evaluated the effectiveness of upper gastrointestinal (GI) endoscopy as an instrument for early gastric cancer (GC) detection in Lynch syndrome (LS) patients by analyzing data from the registry of the German Consortium for Familial Intestinal Cancer. In a prospective, multicenter cohort study, 1128 out of 2009 registered individuals with confirmed LS underwent 5176 upper GI endoscopies. Compliance was good since 77.6% of upper GI endoscopies were completed within the recommended interval of 1 to 3 years. Forty-nine GC events were observed in 47 patients. MLH1 (n = 21) and MSH2 (n = 24) mutations were the most prevalent. GCs in patients undergoing regular surveillance were diagnosed significantly more often in an early-stage disease (UICC I) than GCs detected through symptoms (83% vs 25%; P = .0231). Thirty-two (68%) patients had a negative family history of GC. The median age at diagnosis was 51 years (range 28-66). Of all GC patients, 13 were diagnosed at an age younger than 45. Our study supports the recommendation of regular upper GI endoscopy surveillance for LS patients beginning no later than at the age of 30. What's new? Risk of gastric cancer (GC) is significantly increased among patients with Lynch syndrome (LS). GC screening in LS patients, however, is fraught with uncertainty, particularly regarding the use of esophagogastroduodenoscopy (EGD). The authors of this study investigated the use of EGD for regular GC surveillance in a German cohort of LS patients. Regular surveillance by EGD resulted in more frequent diagnosis and significant down-staging of GC, relative to detection via symptoms alone. In most cases, family history of GC was negative. This study supports recommendations for regular gastroscopic surveillance in LS patients starting by age 30