Executive Summary of Work Package 3 on Availability and Choice of Care of the ANCIEN Project. ENEPRI Research Report No. 101, February 2012

Work Package 3 on the Availability and Choice of Care of the ANCIEN project aims to document the forces driving the choice of formal and informal care across European countries and to characterise the linkages between the type of care used by dependent people and a country's institutional setting, which determines the supply of formal and informal care. Different issues related to formal and informal care choices and the LTC (long-term care) institutional setting in the EU have been analysed by the WP3 contributors. This research report summarises each partner’s contribution

Hazardous Times for Monetary Policy: What do Twenty-three Million Bank Loans Say about the Effects of Monetary Policy on Credit Risk?

We investigate the impact of the stance and path of monetary policy on the level of credit risk of individual bank loans and on lending standards. We employ the Credit Register of the Bank of Spain that contains detailed monthly information on virtually all loans granted by all credit institutions operating in Spain during the last twenty-two years – generating almost twenty-three million bank loan records in total. Spanish monetary conditions were exogenously determined during the entire sample period. Using a variety of duration models we find that lower short-term interest rates prior to loan origination result in banks granting more risky new loans. Banks also soften their lending standards – they lend more to borrowers with a bad credit history and with high uncertainty. Lower interest rates, by contrast, reduce the credit risk of outstanding loans. Loan credit risk is maximized when both interest rates are very low prior to loan origination and interest rates are very high over the life of the loan. Our results suggest that low interest rates increase bank risk-taking, reduce credit risk in banks in the very short run but worsen it in the medium run. Risk-taking is not equal for all type of banks: Small banks, banks with fewer lending opportunities, banks with less sophisticated depositors, and savings or cooperative banks take on more extra risk than other banks when interest rates are lower. Higher GDP growth reduces credit risk on both new and outstanding loans, in stark contrast to the differential effects of monetary policy.monetary policy;low interest rates;financial stability;lending standards;credit risk;risk-taking;business cycle;bank organization;duration analysis

Cooperation Without Convergence: Border Carbon Adjustment and Heterogeneity of Climate Actions

Border Carbon Adjustment measures (“BCAs”) were originally conceived to help solve a problem that arises when countries ask firms to internalize the costs of environmental depredation in an open economy. Environmental regulation raises costs to domestic producers who feel and are — both are relevant — disadvantaged vis-à-vis their foreign competitors subject to lower regulatory costs, in ways that impact economic competitiveness but also the effectiveness of the regulation itself, to the extent it is directed at a ‘global commons’ problem such as reducing greenhouse gas (“GHG”) emissions in an attempt to mitigate climate change. However, BCAs create issues of their own. Among other problems, they may prejudge the recognition of climate actions and impose trade barriers based on that unilateral valuation. This in turn may alienate trading countries subject to such measures, leading to a logic of tit-for-tat retaliation. The disruption from environmental border measures can be exacerbated by the design and features of specific BCAs, while their level of trade-restrictiveness could be measured through the application of traditional international trade disciplines. In view of this, this paper examines a possible way forward that combines cooperation on trade policy without convergence on climate action — the ‘climate mutual recognition’ approach — concluding that it bears the potential to address some of the most problematic impacts of unilateral BCAs while accommodating the legal and political constraints that define the current state of climate and trade governance

Hazardous Times for Monetary Policy:What do Twenty-three Million Bank Loans Say about the Effects of Monetary Policy on Credit Risk?

We investigate the impact of the stance and path of monetary policy on the level of credit risk of individual bank loans and on lending standards. We employ the Credit Register of the Bank of Spain that contains detailed monthly information on virtually all loans granted by all credit institutions operating in Spain during the last twenty-two years – generating almost twenty-three million bank loan records in total. Spanish monetary conditions were exogenously determined during the entire sample period. Using a variety of duration models we find that lower short-term interest rates prior to loan origination result in banks granting more risky new loans. Banks also soften their lending standards – they lend more to borrowers with a bad credit history and with high uncertainty. Lower interest rates, by contrast, reduce the credit risk of outstanding loans. Loan credit risk is maximized when both interest rates are very low prior to loan origination and interest rates are very high over the life of the loan. Our results suggest that low interest rates increase bank risk-taking, reduce credit risk in banks in the very short run but worsen it in the medium run. Risk-taking is not equal for all type of banks: Small banks, banks with fewer lending opportunities, banks with less sophisticated depositors, and savings or cooperative banks take on more extra risk than other banks when interest rates are lower. Higher GDP growth reduces credit risk on both new and outstanding loans, in stark contrast to the differential effects of monetary policy.

Fulminant fatal necrotising fasciitis in an extremely preterm infant

A 23+0 week gestation twin girl weighing 465 g was born via spontaneous vaginal delivery. On postnatal day 4, a small area of broken skin was noted on her back. Flucloxacillin and gentamicin were commenced and Cavilon cream was applied. Vancomycin was substituted after blood culture grew Staphylococcus epidermidis. A skin swab isolated skin flora only. By postnatal day 10, the lesion had worsened with a haemorrhagic petechial appearance and multiple abscesses (figure 1). Staphylococcal impetigo was suspected and fusidic acid cream, mupirocin and paraffin ointment were added. Repeat blood culture grew Klebsiella oxytoca and meropenem was added. By day 12, there were extensive necrotic and gangrenous areas with ecchymotic ‘lakes’ of pus covering her head, back, groin and arms (figure 2). Necrotising fasciitis was diagnosed. Repeat skin swab grew Klebsiella oxytoca, Enterococcus faecalis, Staphylococcus haemolyticus and Aspergillus flavus. Surgical debridement was considered unfeasible due to her extreme prematurity and progressive septic deterioration. Following a multidisciplinary team meeting including parents, intensive care was withdrawn on day 12

Making It Public: The Effect of (Private and Public) Wage Proposals on Efficiency and Income Distribution

The implications of (public or private) pre-play communication and information revelation in a labour relationship is not well understood. We address these implications theoretically and experimentally. In our baseline experiments, the employer offers a wage to the worker who may then accept or reject it. In the public and private treatment, workers, moving first, make a non-binding private or public wage proposal. Our theoretical model assumes that wage proposals convey information about a worker’s minimum acceptable wage and are misreported with a certain probability. It predicts that, on average, wage proposals lead to higher wage offers and acceptance rates, with the highest wages under private proposals. While both, public and private, proposals increase efficiency over the baseline, private proposals generate higher worker incomes. Broad support for the theoretical predictions is found in the laboratory experiments. Our work has important implications for recent policies promoting public information on wage negotiations. We find that while wage proposals promote higher wages, efficiency, and income equality, public information on wage negotiations is likely to benefit firms more than workers