International Welfare Spillovers of National Pension Schemes

We employ a two-country overlapping-generations model to explore the international dimension of household portfolio choices induced by the asymmetric provision of government-run pensions. We study the resulting patterns of risk-sharing and the corresponding welfare effects on both home and foreign agents. Introducing the defined benefits pay-as-you-go system at home increases the welfare of all other agents at the expense of the home workers and improves the degree of intergenerational risk sharing abroad. Conversely, a defined contributions system leads to welfare losses of both home cohorts accompanied by gains abroad, but does increase the extent of intergenerational risk sharing at home

International Risk Sharing in Overlapping Generations Models

We present a solution to the Backus-Smith puzzle that, instead of relying on extreme parameter values or complex modeling assumptions, simply switches the framework from infinitely lived agents to overlapping generations. Young agents face non-diversifiable wage risk that leads to a low degree of risk sharing within each country. Subsequently, international price movements are not sufficient to achieve the high consumption-real exchange rate correlation produced in standard infinitely lived agent DSGE models

Exchange Rate Targeting in the Presence of Foreign Debt Obligations

We study the impact of foreign debt on the trade-off between the three open economy objectives of a central bank - international risk sharing, the need to facilitate expenditure-switching, and the incentive to tilt international prices to lower the labor effort of domestic households - in a two-country DSGE model with incomplete asset markets and deviations from the purchasing power parity. We find that at low debt levels, a Taylor rule outperforms simple targeting rules. However, the central bank can improve welfare by up to 0.25 percent of consumption via an exchange rate peg when debt-to-GDP ratio reaches 100 percent

Impact of Pension System Structure on International Financial Capital Allocation

Government pension systems vary widely from country to country. Evidence from a cross-section of 110 countries indicates that structural differences in public pension programs are related to reallocation of financial capital around the world. More specifically, we find that greater amounts of pension spending are associated with overall net international indebtedness and a net portfolio characterized by equity assets and debt liabilities. We present a two-country overlapping-generations model that can replicate these empirical regularities and elucidate the link between the structure of pension benefits and the resulting portfolio choices of economic agents. In the country with state-guaranteed pension benefits, workers face a lower overall riskiness of lifetime wealth. As a result, they are willing to invest in risky equity financed by the selling of domestic bonds. Workers in the country with no pension system, on the other hand, tend to be net savers and favor safe debt assets in their portfolio. These findings can help to explain the buildup of global financial imbalances over the last three decades as well as to analyze future changes in capital allocation patterns due to the ongoing pension system reforms in many developing and developed countries

Nonlinearities in the Real Exchange Rates: New Evidence from Developed and Developing Countries

This paper investigates nonlinearities in the dynamics of real exchange rates. We use Monte Carlo simulations to establish the size properties of the Teräsvirta-Anderson (1992) and the Teräsvirta (1994) test, when the dynamics of the real exchange rate is influenced by an exogenous process. In addition, we examine the modification proposed by Ahmad, Lo and Mykhaylova (2013; Journal of International Economics) to show that the modified nonlinearity test performs much better than the original in both Monte Carlo exercises and in the actual data on 1431 bilateral real exchange rate series. Finally, we investigate the dynamics of the real exchange rate for both developed and developing countries using the modified test for the recent floating period. In general, the results finds a greater incidence of nonlinear dynamics for developing country real exchange rates

Modified HPV16 E7 Genes as DNA Vaccine against E7-Containing Oncogenic Cells

AbstractTherapeutic vaccines against tumors associated with human papillomaviruses (HPV) should elicit cellular immune responses against early HPV antigens, primarily the oncoproteins E7 and E6. Because of safety concerns, the direct use of an unmodified oncogene is impossible in human DNA vaccination. Therefore, we introduced three point mutations into the pRb-binding site of HPV16 E7 oncogene to eliminate its transformation potential. The resultant gene was denoted E7GGG. The rates of expression and the cellular localization of E7 and E7GGG proteins were comparable. In immunization-challenge experiments, the efficacy of plasmids containing the E7, E7GGG, or fusion genes of HPV16 E7, viz. L1ΔCE71–60 (M. Muller et al., 1997, Virology 234, 93–111), and Sig/E7/LAMP-1 (T. C. Wu et al., 1995, Proc. Natl. Acad. Sci. USA 92, 11671–11675), was compared. While tumors developed in all animals immunized with the wild-type E7 gene, a significant proportion of mice remained tumor-free after vaccination with the E7GGG gene. The fusion gene L1ΔCE71–60 induced negligible protection, but Sig/E7/LAMP-1 conferred the highest protection. Intradermal immunization by gene gun proved superior to i.m. inoculation. In “therapeutic” experiments, a 1-day delay between inoculation of oncogenic cells and the start of DNA immunization resulted in partial therapeutic effect, but a 3-day delay produced a substantially lower immunization effect. A combination of Sig/E7/LAMP-1 and E7GGG genes did not enhance the immune response. These results demonstrate a significant enhancement of HPV16 E7 immunogenicity after mutagenesis of the pRb-binding site, but the mutated E7 gene did not excel the Sig/E7/LAMP-1 fusion gene