Implied Exchange Rate Distributions: Evidence from OTC Option Markets

This paper uses a rich new data set of option prices on the dollar-mark, dollar-yen, and key EMS cross-rates to extract the entire risk-neutral probability density function (pdf) over horizons of one and three months. We compare three alternative smoothing methods---cubic splines, an implied binomial tree (trimmed and untrimmed), and a mixture of lognormals---for transforming option data into the pdf. Despite their methodological ifferences, the three approaches lead to a similar pdf distinct from the lognormal benchmark, and usually characterized by skewness and leptokurtosis. We then document a striking positive correlation between skewness in these pdfs and the spot rate. The stronger a currency the more expectations are skewed towards a further appreciation of that currency. We interpret this finding as a rejection that these exchange rates evolve as a martingale, or that they follow a credible target zone, explicit or implicit. Instead, this this positive correlation is consistent with target zones with endogenous realignment risk. We discuss two interpretations of our results on skewness: when a currency is stronger, the actual probability of further large appreciation is higher, or because of risk, such states are valued more highly.

Cabbage and fermented vegetables : From death rate heterogeneity in countries to candidates for mitigation strategies of severe COVID-19

Large differences in COVID-19 death rates exist between countries and between regions of the same country. Some very low death rate countries such as Eastern Asia, Central Europe, or the Balkans have a common feature of eating large quantities of fermented foods. Although biases exist when examining ecological studies, fermented vegetables or cabbage have been associated with low death rates in European countries. SARS-CoV-2 binds to its receptor, the angiotensin-converting enzyme 2 (ACE2). As a result of SARS-CoV-2 binding, ACE2 downregulation enhances the angiotensin II receptor type 1 (AT(1)R) axis associated with oxidative stress. This leads to insulin resistance as well as lung and endothelial damage, two severe outcomes of COVID-19. The nuclear factor (erythroid-derived 2)-like 2 (Nrf2) is the most potent antioxidant in humans and can block in particular the AT(1)R axis. Cabbage contains precursors of sulforaphane, the most active natural activator of Nrf2. Fermented vegetables contain many lactobacilli, which are also potent Nrf2 activators. Three examples are: kimchi in Korea, westernized foods, and the slum paradox. It is proposed that fermented cabbage is a proof-of-concept of dietary manipulations that may enhance Nrf2-associated antioxidant effects, helpful in mitigating COVID-19 severity.Peer reviewe

Nrf2-interacting nutrients and COVID-19 : time for research to develop adaptation strategies

There are large between- and within-country variations in COVID-19 death rates. Some very low death rate settings such as Eastern Asia, Central Europe, the Balkans and Africa have a common feature of eating large quantities of fermented foods whose intake is associated with the activation of the Nrf2 (Nuclear factor (erythroid-derived 2)-like 2) anti-oxidant transcription factor. There are many Nrf2-interacting nutrients (berberine, curcumin, epigallocatechin gallate, genistein, quercetin, resveratrol, sulforaphane) that all act similarly to reduce insulin resistance, endothelial damage, lung injury and cytokine storm. They also act on the same mechanisms (mTOR: Mammalian target of rapamycin, PPAR gamma:Peroxisome proliferator-activated receptor, NF kappa B: Nuclear factor kappa B, ERK: Extracellular signal-regulated kinases and eIF2 alpha:Elongation initiation factor 2 alpha). They may as a result be important in mitigating the severity of COVID-19, acting through the endoplasmic reticulum stress or ACE-Angiotensin-II-AT(1)R axis (AT(1)R) pathway. Many Nrf2-interacting nutrients are also interacting with TRPA1 and/or TRPV1. Interestingly, geographical areas with very low COVID-19 mortality are those with the lowest prevalence of obesity (Sub-Saharan Africa and Asia). It is tempting to propose that Nrf2-interacting foods and nutrients can re-balance insulin resistance and have a significant effect on COVID-19 severity. It is therefore possible that the intake of these foods may restore an optimal natural balance for the Nrf2 pathway and may be of interest in the mitigation of COVID-19 severity

ERM bandwidths for EMU and after: evidence from foreign exchange options

Are the wide bands adopted in the summer of 1993 too large? The official answer is that wide bands offer a protection against speculative pressure, while exchange rates may be kept within narrower margins at the discretion of the authorities. Yet if exchange rate fixity and predictability are desirable, as implicitly assumed by the mere existence of the system, there must exist a trade-off between protection against speculative pressure and predictability. In that case, the bandwidth chosen should be as narrow as possible and yet unlikely to be challenged by the markets. This paper offers estimates of 'safe' bandwidths. For the long-term member currencies (French franc, peseta, Danish krone and escudo), the existing 15% bands are found to be unnecessarily wide: narrower 3.5% bands would capture at least 95% of expected exchange rate realizations over a three-month horizon. For the lira, Finnish markka and Swedish krone, wider bands of 5-6% would capture a similar amount of the exchange rate distribution. The pound's exchange rate expectations are the most dispersed, requiring 8.4% bands to capture 95% of exchange rate expectations. Copyright Centre for Economic Policy Research, Centre for Economic Studies, Maison des Sciences de l'Homme 1997.

The impact of negative‐pressure wound therapy with instillation on wounds requiring operative debridement: Pilot randomised, controlled trial

Presence of bacteria in wounds can delay healing. Addition of a regularly instilled topical solution over the wound during negative‐pressure wound therapy (NPWT) may reduce bioburden levels compared with standard NPWT alone. We performed a prospective, randomised, multi‐centre, post‐market trial to compare effects of NPWT with instillation and dwell of polyhexamethylene biguanide solution vs NPWT without instillation therapy in wounds requiring operative debridement. Results showed a significantly greater mean decrease in total bacterial counts from time of initial surgical debridement to first dressing change in NPWT plus instillation (n = 69) subjects compared with standard NPWT (n = 63) subjects (−0.18 vs 0.6 log10 CFU/g, respectively). There was no significant difference between the groups in the primary endpoint of required inpatient operating room debridements after initial debridement. Time to readiness for wound closure/coverage, proportion of wounds closed, and incidence of wound complications were similar. NPWT subjects had 3.1 times the risk of re‐hospitalisation compared with NPWT plus instillation subjects. This study provides a basis for exploring research options to understand the impact of NPWT with instillation on wound healing