Why do foreigners invest in the United States?

Why are foreigners willing to invest almost $2 trillion per year in the United States? The answer affects if the existing pattern of global imbalances can persist and if the United States can continue to finance its current account deficit without a major change in asset prices and returns. This paper tests various hypotheses and finds that standard portfolio allocation models and diversification motives are poor predictors of foreign holdings of U.S. liabilities. Instead, foreigners hold greater shares of their investment portfolios in the United States if they have less-developed financial markets. The magnitude of this effect decreases with income per capita. Countries with fewer capital controls and greater trade with the United States also invest more in U.S. equity and bond markets, and there is no evidence that foreigners invest in the United States based on diversification motives. The empirical results showing a primary role of financial market development in driving foreign purchases of U.S. portfolio liabilities supports recent theoretical work on global imbalances.

One Cost of the Chilean Capital Controls: Increased Financial Constraints for Smalles Traded Firms

There is growing support for taxes on short-term capital inflows in emerging markets, such as the encaje adopted by Chile from 1991-98. Previous empirical assessments of the encaje conclude that it may have generated some small economic benefits, such as shifting the composition of capital inflows to a longer maturity, but no significant economic costs. Managers of small and medium-sized companies in Chile, however, claim that the encaje made it substantially more difficult to obtain financing for productive investment. This paper assesses whether the Chilean capital controls increased financial constraints for different-sized, publicly-traded firms. It uses two different testing methodologies: a Tobin's q and Euler-equation framework. Results indicate that during the encaje, smaller traded firms in Chile experienced significant financial constraints and these constraints decreased as firm size increased. Both before and after the encaje, however, no group of traded firms experienced significant financial constraints, and there is no relationship between firm size and financial constraints. Although Chilean-style capital controls may also yield benefits encaje could be particularly important in emerging markets where smaller firms can be valuable sources of job creation and economic growth.

Capital Controls: Mud in the Wheels of Market Discipline

Widespread support for capital account liberalization in emerging markets has recently shifted to skepticism and even support for capital controls in certain circumstances. This sea-change in attitudes has been bolstered by the inconclusive macroeconomic evidence on the benefits of capital account liberalization. There are several compelling reasons why it is difficult to measure the aggregate impact of capital controls in very different countries. Instead, a new and more promising approach is more detailed microeconomic studies of how capital controls have generated specific distortions in individual countries. Several recent papers have used this approach and examined very different aspects of capital controls from their impact on crony capitalism in Malaysia and on financing constraints in Chile, to their impact on US multinational behavior and the efficiency of stock market pricing. Each of these diverse studies finds a consistent result: capital controls have significant economic costs and lead to a misallocation of resources. This new microeconomic evidence suggests that capital controls are not just sand', but rather mud in the wheels' of market discipline.

Husbands’ job loss and wives’ labor force participation during economic downturns: are all recessions the same?

Earlier research showed an added-worker effect for wives when their husbands stopped working during the Great Recession (December 2007–June 2009) but not when husbands stopped working in recent years of prosperity (2004–2005). By including one recession per decade for the 1980s, 1990s, and 2000s, this article builds upon that research by using Current Population Survey data to compare wives’ labor force responses to their husbands stopping work across three recessions to determine whether wives’ employment responses during the Great Recession differed from those during earlier recessions. Additionally, we hypothesize motivations for wives entering the labor force and consider the occupations they enter. Across all three recessions included in this study, wives entered the labor force more often when their husband stopped working. More nuanced analyses show that during both the Great Recession and the 1990–1991 recession, wives were more likely to seek work and find a job if their husband became not employed, while in the 1981–1982 recession wives were more likely to seek work but less likely to find a job. We also find that wives who started a job during the Great Recession or the 1990–1991 recession were more likely to enter service occupations than professional or managerial occupations, but this was not the case during the 1981–1982 recession. Furthermore, during the three recessions, college-educated wives who started a job were more likely than wives with less education to enter professional and managerial occupations relative to service occupations or other occupations. However, these newly employed college-educated wives were somewhat more likely to enter service or other occupations than their college-educated counterparts who were employed continuously

The Physiological Consequences of Bed Rest

Bed rest often is used to treat a wide variety of medical conditions. However, bed rest results in profound deconditioning of the body. Bed rest reduces the hydrostatic pressure gradient within the cardiovascular system, reduces muscle force production, virtually eliminates compression on the bones, and lowers total energy expenditure. This review focuses on the deconditioning that occurs in the cardiovascular, muscular, and skeletal systems following bed rest. Reduction in plasma volume reduces cardiac preload, stroke volume, cardiac output, and ultimately, maximal oxygen consumption. Skeletal muscle volume, muscle cross sectional area, and fiber cross sectional area decrease, which results in diminished muscular strength. These changes are most pronounced in the antigravity muscles. Increased bone resorption leads to a negative calcium balance and eventually decreased bone mass, particularly in the lower limbs. Diminished bone mass coupled with decreased muscular strength increases the risk of bone fractures, even with minor falls. It is important for clinicians to recognize these negative consequences of bed rest, which can be explained independent of disease or disorder. With this in mind, bed rest can be minimized as much as possible and early ambulation and physical activity may be prescribed to limit the deconditioning effects of bed rest

Muscle Cramping During a 161-km Ultramarathon: Comparison of Characteristics of Those With and Without Cramping

Background: This work sought to identify characteristics differing between those with and without muscle cramping during a 161-km ultramarathon. Methods: In this observational study, race participants underwent body weight measurements before, during, and after the race; completed a post-race questionnaire about muscle cramping and “near” cramping (controllable, not reaching full-blown cramping), drinking strategies, and use of sodium supplementation during four race segments; and underwent a post-race blood draw for determination of serum sodium and blood creatine kinase (CK) concentrations. Results: The post-race questionnaire was completed by 280 (74.5 %) of the 376 starters. A post-race blood sample was provided by 181 (61.1 %) of the 296 finishers, and 157 (53.0 %) of finishers completed the post-race survey and also provided a post-race blood sample. Among those who completed the survey, the prevalence of cramping and near cramping was 14.3 and 26.8 %, respectively, with greatest involvement being in the calf (54 %), quadriceps (44 %), and hamstring (33 %) muscles. Those with cramping or near cramping were more likely to have a prior history of muscle cramping during an ultramarathon (p \u3c 0.0001) and had higher blood CK concentrations (p = 0.001) than those without cramping. Weight change during the race, use of sodium supplements, intake rate of sodium in supplements, and post-race serum sodium concentration did not differ between those with and without cramping. Conclusions: Muscle cramping is most common in those with a prior history of cramping and greater muscle damage during an ultramarathon, suggesting an association with relative muscular demand. Impaired fluid and sodium balance did not appear to be an etiology of muscle cramping during an ultramarathon

Muscle Cramping During a 161-km Ultramarathon: Comparison of Characteristics of Those With and Without Cramping

Background: This work sought to identify characteristics differing between those with and without muscle cramping during a 161-km ultramarathon. Methods: In this observational study, race participants underwent body weight measurements before, during, and after the race; completed a post-race questionnaire about muscle cramping and “near” cramping (controllable, not reaching full-blown cramping), drinking strategies, and use of sodium supplementation during four race segments; and underwent a post-race blood draw for determination of serum sodium and blood creatine kinase (CK) concentrations. Results: The post-race questionnaire was completed by 280 (74.5 %) of the 376 starters. A post-race blood sample was provided by 181 (61.1 %) of the 296 finishers, and 157 (53.0 %) of finishers completed the post-race survey and also provided a post-race blood sample. Among those who completed the survey, the prevalence of cramping and near cramping was 14.3 and 26.8 %, respectively, with greatest involvement being in the calf (54 %), quadriceps (44 %), and hamstring (33 %) muscles. Those with cramping or near cramping were more likely to have a prior history of muscle cramping during an ultramarathon (p \u3c 0.0001) and had higher blood CK concentrations (p = 0.001) than those without cramping. Weight change during the race, use of sodium supplements, intake rate of sodium in supplements, and post-race serum sodium concentration did not differ between those with and without cramping. Conclusions: Muscle cramping is most common in those with a prior history of cramping and greater muscle damage during an ultramarathon, suggesting an association with relative muscular demand. Impaired fluid and sodium balance did not appear to be an etiology of muscle cramping during an ultramarathon

Simple Calculation of Instanton Corrections in Massive N=2 SU(3) SYM

We give an explicit derivation of the Picard-Fuchs equations for N=2 supersymmetric SU(3) Yang-Mills theory with $N_f<6$ massive hypermultiplets in the fundamental representation. We determine the instanton corrections to the prepotential in the weak coupling region using the relation between \tr and the prepotential. This method can be generalized to other gauge groups.Comment: 16 pages, Late

Trade Linkages and Output-Multiplier Effects: A Structural VAR Approach with a Focus on Asia

This paper develops a structural VAR model to measure how a shock to one country can affect the GDP of other countries. It uses trade linkages to estimate the multiplier effects of a shock as it is transmitted through other countries' output fluctuations. The paper introduces a new specification strategy that significantly reduces the number of unknowns and allows cross-country relationships to vary over time. Then it uses this model to examine the impact of shocks to 11 Asian countries, the U.S. and the rest of the OECD. The model produces reasonably good short-term forecasts. Impulse-response matrices suggest that these multiplier effects are large and significant and can transmit shocks in very different patterns than predicted from a bilateral-trade matrix. For example, due to these output-multiplier effects, a shock to one country can have a large impact on countries that are relatively minor bilateral trading partners.