The comovement of credit default swap, bond and stock markets: an empirical analysis

This paper analyzes the empirical relationship between credit default swap, bond and stock markets during the period 2000-2002. Focusing on the intertemporal comovement, we examine weekly and daily lead-lag relationships in a vector autoregressive model and the adjustment between markets caused by cointegration. First, we find that stock returns lead CDS and bond spread changes. Second, CDS spread changes Granger cause bond spread changes for a higher number of firms than vice versa. Third, the CDS market is significantly more sensitive to the stock market than the bond market and the magnitude of this sensitivity increases when credit quality becomes worse. Finally, the CDS market plays a more important role for price discovery than the corporate bond market.Credit risk; Credit spreads; Credit derivatives; Lead-lag relationship

Improving fiscal policy in the EU: the case for independent forecasts

The evidence from several euro-area countries demonstrates the existence of a forecast bias in the budgetary process, which negatively affects fiscal performance. To remedy this bias, we suggest that forecasting should be assigned to an authority independent from the ministry of finance and the government, with the task of producing unbiased projections of growth and other variables crucial for the budgetary process.independent forecasts, taxation, fiscal policy, forecast bias, forecasts, Jonung, Larch

Band-steaming reduces laborious hand-weeding in vegetables

Band-steaming is a new method that may reduce the need for hand-weeding in demanding row crops like carrot and drilled onion. Band-steaming only affects a soil volume equal to the intra-row area of the subsequent crop, and effectively kills the weed seeds in this soil volume. Side-effects on beneficial soil organisms are minimized as compared to current steaming technology, but still need to be assessed