The Causal Relationship between Inflation and Inflation Expectations in the United Kingdom

Two major events have affected the monetary regime in the United Kingdom in recent years, namely the introduction of inflation targeting, and the granting of operational independence to the Bank of England. In this paper we examine what impact, if any, these events have had on inflation expectations. A series of Granger causality tests are used in order to examine the causal relationship between a measure of prices and inflation expectations. We find evidence that the introduction of inflation targeting caused both the general public and professionals to anchor their expectations, rather than basing them on current RPI inflation.inflation; expectations

Savings and Financial Sector Development: Panel Cointegration Evidence from Africa

financial sector development, private savings, panel cointegration tests, Africa

Financial Sector Development - Futile or Fruitful? An Examination of the Determinants of Savings in Sri Lanka

saving, financial sector development, cointegration, principal components, Sri Lanka

Rising foreclosures in the United States: a perfect storm

Residential foreclosures in the United States have been rising very rapidly since 2006. In the second quarter of 2007, the share of outstanding mortgages in some stage of foreclosure stood at 1.4 percent, near historic highs and up from less than 1 percent a year earlier. The number of mortgages entering the foreclosure process reached an all-time high in mid-2007, suggesting that the foreclosure surge is likely to get worse before it gets better. ; The foreclosure surge was created by a perfect storm of events. First, in recent years the share of subprime mortgage originations increased substantially. Second, foreclosure rates for adjustable-rate mortgages (ARMs) have increased considerably, especially for subprime ARMs. This increase is largely due to rising short-term interest rates and to payment resets for many nontraditional mortgages. Finally, high loan-to-value originations in recent years, coupled with stagnant or falling home prices, have left many people with insufficient equity to sell or refinance their homes. ; Edmiston and Zalneraitis provide a detailed dissection of the current foreclosure surge. They conclude with a discussion of why the foreclosure situation is likely to get worse over the next one to two years and why it is likely to improve afterward.Mortgage loans

Climate Change Uncertainty Quantification: Lessons Learned from the Joint EU-USNRC Project on Uncertainty Analysis of Probabilistic Accident Consequence Codes

Between 1990 and 2000 the U.S. Nuclear Regulatory Commission and the Commission of the European Communities conducted a joint uncertainty analysis of accident consequences for nuclear power plants. This study remains a benchmark for uncertainty analysis of large models involving high risks with high public visibility, and where substantial uncertainty exists. The study set standards with regard to structured expert judgment, performance assessment, dependence elicitation and modeling and uncertainty propagation of high dimensional distributions with complex dependence. The integrated assessment models for the economic effects of climate change also involve high risks and large uncertainties, and interest in conducting a proper uncertainty analysis is growing. This article reviews the EU-USNRC effort and extracts lessons learned, with a view toward informing a comparable effort for the economic effects of climate change.uncertainty analysis, expert judgment, expert elicitation, probabilistic inversion, dependence modeling, nuclear safety

Does Financial Sector Development Enhance the Relationship between FDI and Economic Growth? A Comparative Study of East African Countries

This study examines the causal relationship between FDI and GDP growth in a number of East African countries, focusing on the impact of financial sector development on this relationship. There are strong theoretical reasons to believe that a developed financial sector will enhance the impact of FDI on growth, but empirical evidence remains scant. This study looks first at the short term causal relationship between FDI and GDP growth, using a robust methodology that avoids issues associated with Granger causality testing. This testing indicates little evidence of a relationship. Johansen cointegration testing yields little evidence of a long run relationship when a VECM containing just FDI and GDP growth is estimated, however once variables proxying financial sector development and an interaction variable between FDI and financial sector development are included, we find that although FDI and GDP growth may not be cointegrated directly, there is a relationship running through their interaction with the financial sector, and that FDI only appears to have a positive impact on GDP growth in cases where the financial sector is more developed. This finding is in line with the findings of previous researchers, and has important policy implications

Are you only as good as you look? What is your web site saying about you? [poster]

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Quantification of Pulmonary Arterial Wall Distensibility Using Parameters Extracted from Volumetric Micro-CT Images

Stiffening, or loss of distensibility, of arterial vessel walls is among the manifestations of a number of vascular diseases including pulmonary arterial hypertension. We are attempting to quantify the mechanical properties of vessel walls of the pulmonary arterial tree using parameters derived from high-resolution volumetric x-ray CT images of rat lungs. The pulmonary arterial trees of the excised lungs are filled with a contrast agent. The lungs are imaged with arterial pressures spanning the physiological range. Vessel segment diameters are measured from the inlet to the periphery, and distensibilities calculated from diameters as a function of pressure. The method shows promise as an adjunct to other morphometric techniques such as histology and corrosion casting. It possesses the advantages of being nondestructive, characterizing the vascular structures while the lungs are imaged rapidly and in a near-physiological state, and providing the ability to associate mechanical properties with vessel location in the intact tree hierarchy