The Effect of Bankruptcy Laws on the Valuation of Risky Consumer Debt

In a market setting with perfect information, a consumer recognizes that he can influence the state-contingent returns, and hence the pric, of his risky debt by the decision variables that determine the collateral and promised payments. This paper examines the effect of bankruptcy laws on the feasible consumption opportunities of borrowers and lenders in order to determine the necessary requirements for the bilateral debt market to be perfectly competitive.Peer Reviewedhttp://deepblue.lib.umich.edu/bitstream/2027.42/72017/1/j.1540-6288.1989.tb00348.x.pd

Pain tolerance after stroke: The Tromsø study

Background: Stroke lesions might alter pain processing and modulation by affecting the widely distributed network of brain regions involved. We aimed to compare pain tolerance in stroke survivors and stroke-free persons in the general population, with and without chronic pain. Methods: We included all participants of the sixth and seventh wave of the population-based Tromsø Study who had been tested with the cold pressor test (hand in cold water bath, 3°C, maximum time 106 s in the sixth wave and 120 s in the seventh) and who had information on previous stroke status and covariates. Data on stroke status were obtained from the Tromsø Study Cardiovascular Disease Register and the Norwegian Stroke Register. Cox regression models were fitted using stroke prior to study attendance as the independent variable, cold pressor endurance time as time variable and hand withdrawal from cold water as event. Statistical adjustments were made for age, sex, diabetes, hypertension, hyperlipidaemia, body mass index and smoking. Results: In total 21,837 participants were included, 311 of them with previous stroke. Stroke was associated with decreased cold pain tolerance time, with 28% increased hazard of hand withdrawal (hazard ratio [HR] 1.28, 95% CI 1.10–1.50). The effect was similar in participants with (HR 1.28, 95% CI 0.99–1.66) and without chronic pain (HR 1.29, 95% CI 1.04–1.59). Conclusions: Stroke survivors, with and without chronic pain, had lower cold pressor pain tolerance, with possible clinical implications for pain in this group. Significance: We found lower pain tolerance in participants with previous stroke compared to stroke-free participants of a large, population-based study. The association was present both in those with and without chronic pain. The results may warrant increased awareness by health professionals towards pain experienced by stroke patients in response to injuries, diseases and procedures

Limiting distributions for explosive PAR(1) time series with strongly mixing innovation

This work deals with the limiting distribution of the least squares estimators of the coefficients a r of an explosive periodic autoregressive of order 1 (PAR(1)) time series X r = a r X r--1 +u r when the innovation {u k } is strongly mixing. More precisely {a r } is a periodic sequence of real numbers with period P \textgreater{} 0 and such that P r=1 |a r | \textgreater{} 1. The time series {u r } is periodically distributed with the same period P and satisfies the strong mixing property, so the random variables u r can be correlated

Is this the Minsky Moment for Reform of Financial Regulation?

The current financial crisis has been characterized as a 'Minsky' moment, and as such provides the conditions required for a reregulation of the financial system similar to that of the New Deal banking reforms of the 1930s. However, Minsky's theory was not one that dealt in moments but rather in systemic, structural changes in the operations of financial institutions. Therefore, the framework for reregulation must start with an understanding of the longer-term systemic changes that took place between the New Deal reforms and their formal repeal under the 1999 Financial Services Modernization Act. This paper attempts to identify some of those changes and their sources. In particular, it notes that the New Deal reforms were eroded by an internal process in which commercial banks that were given a monopoly position in deposit taking sought to remove those protections because unregulated banks were able to provide substitute instruments that were more efficient and unregulated but unavailable to regulated banks, since they involved securities market activities that would eventually be recognized as securitization. Regulators and the courts contributed to this process by progressively ruling that these activities were related to the regulated activities of the commercial banks, allowing them to reclaim securities market activities that had been precluded in the New Deal legislation. The 1999 Act simply made official the de facto repeal of the 1930s protections. Any attempt to provide reregulation of the system will thus require safeguards to ensure that this internal process of deregulation is not repeated

Income effects, cost damping and the value of time: theoretical properties embedded within practical travel choice models

Mackie et al. (Values of travel time savings in the UK. Report to Department for Transport. Institute for Transport Studies, University of Leeds & John Bates Services, Leeds and Abingdon, 2003) proposed an identity relating the value of time (VoT) for commute and leisure travel to income and travel cost, reporting the prevalence of ‘cost damping’ (i.e. the phenomenon where VoT increases as travel cost increases). This identity (or a variant thereof) has been adopted within official methods for estimating VoT in the UK, Switzerland and The Netherlands. The present paper shows that Mackie et al.’s identity: (i) implies linear preferences, not strictly convex preferences as reported by Mackie et al.; (ii) complies with homogeneity and symmetry by construction; (iii) complies with adding-up if and only if VoT is unit elastic with respect to income; (iv) complies with negativity if VoT is unit elastic or greater with respect to income; (v) violates both adding-up and negativity in the case of the 2003 UK national VoT study. We propose alternative identities which comply with adding-up and homogeneity by construction, and offer comparable fit to Mackie et al.’s identity on the UK VoT dataset. We also find that the imposition of adding-up and negativity on Mackie et al.’s identity, through appropriate constraint on model estimation, leads to an increase of around 20% in valuations from the 2003 UK dataset

HIV Epidemic Appraisals for Assisting in the Design of Effective Prevention Programmes: Shifting the Paradigm Back to Basics

To design HIV prevention programmes, it is critical to understand the temporal and geographic aspects of the local epidemic and to address the key behaviours that drive HIV transmission. Two methods have been developed to appraise HIV epidemics and guide prevention strategies. The numerical proxy method classifies epidemics based on current HIV prevalence thresholds. The Modes of Transmission (MOT) model estimates the distribution of incidence over one year among risk-groups. Both methods focus on the current state of an epidemic and provide short-term metrics which may not capture the epidemiologic drivers. Through a detailed analysis of country and sub-national data, we explore the limitations of the two traditional methods and propose an alternative approach.We compared outputs of the traditional methods in five countries for which results were published, and applied the numeric and MOT model to India and six districts within India. We discovered three limitations of the current methods for epidemic appraisal: (1) their results failed to identify the key behaviours that drive the epidemic; (2) they were difficult to apply to local epidemics with heterogeneity across district-level administrative units; and (3) the MOT model was highly sensitive to input parameters, many of which required extraction from non-regional sources. We developed an alternative decision-tree framework for HIV epidemic appraisals, based on a qualitative understanding of epidemiologic drivers, and demonstrated its applicability in India. The alternative framework offered a logical algorithm to characterize epidemics; it required minimal but key data.Traditional appraisals that utilize the distribution of prevalent and incident HIV infections in the short-term could misguide prevention priorities and potentially impede efforts to halt the trajectory of the HIV epidemic. An approach that characterizes local transmission dynamics provides a potentially more effective tool with which policy makers can design intervention programmes

International money markets: eurocurrencies

Eurocurrencies are international markets for short-term wholesale bank deposits and loans. They emerged in Western Europe in the late 1950s and rapidly reached a global scale. A Eurocurrency is a form of bank money: an unsecured short-term bank debt denominated in a currency (for instance, US dollars) but issued by banks operating offshore, in a geographical location or a legal space situated outside of the jurisdiction of the national authorities presiding over that currency (for instance, the Federal Reserve). In Eurocurrency markets, banks intermediate mainly between foreign residents. They borrow funds by "accepting" foreign currency deposits and lend foreign currency-denominated funds by "placing" deposits with other banks, by granting short-term loans or investing in other liquid assets. Historically, Eurodollars accounted for the largest share of Eurocurrencies, although other international currencies (Deutsche Marks, Japanese yens, and especially Euros since 1999) played an important role. Eurocurrency markets were a manifestation of financial integration and interdependence in a globalizing economy and performed critical functions in the distribution and creation of international liquidity. At the same time, their fast growth was a recurrent source of concerns for central bankers and policymakers due to their implications for macroeconomic policies and financial stability. This chapter analyzes different aspects of the historical development of Eurocurrency markets and their role in the international monetary and financial system. The first part discusses theoretical interpretations, presents estimates of markets' size, describes their structure, and explains the determinants of their growth. The second part analyzes the spread between Eurodollar rates and other US money market rates, the role of arbitrage, the evolution of risk factors, and the causes of historical episodes of stress and contagion in the interbank market. The last part discusses political economy issues, such as the role of governments and market forces in the emergence of Eurodollars in the 1950s and the failed attempts to impose multilateral controls on Eurocurrency markets in the 1970s

Impact of maternal body mass index and gestational weight gain on pregnancy complications : an individual participant data meta-analysis of European, North American and Australian cohorts

Objective To assess the separate and combined associations of maternal pre-pregnancy body mass index (BMI) and gestational weight gain with the risks of pregnancy complications and their population impact. Design Individual participant data meta-analysis of 39 cohorts. Setting Europe, North America, and Oceania. Population 265 270 births. Methods Information on maternal pre-pregnancy BMI, gestational weight gain, and pregnancy complications was obtained. Multilevel binary logistic regression models were used. Main outcome measures Gestational hypertension, pre-eclampsia, gestational diabetes, preterm birth, small and large for gestational age at birth. Results Higher maternal pre-pregnancy BMI and gestational weight gain were, across their full ranges, associated with higher risks of gestational hypertensive disorders, gestational diabetes, and large for gestational age at birth. Preterm birth risk was higher at lower and higher BMI and weight gain. Compared with normal weight mothers with medium gestational weight gain, obese mothers with high gestational weight gain had the highest risk of any pregnancy complication (odds ratio 2.51, 95% CI 2.31- 2.74). We estimated that 23.9% of any pregnancy complication was attributable to maternal overweight/obesity and 31.6% of large for gestational age infants was attributable to excessive gestational weight gain. Conclusions Maternal pre-pregnancy BMI and gestational weight gain are, across their full ranges, associated with risks of pregnancy complications. Obese mothers with high gestational weight gain are at the highest risk of pregnancy complications. Promoting a healthy pre-pregnancy BMI and gestational weight gain may reduce the burden of pregnancy complications and ultimately the risk of maternal and neonatal morbidity.Peer reviewe

Why do banks promise to pay par on demand?

We survey the theories of why banks promise to pay par on demand and examine evidence about the conditions under which banks have promised to pay the par value of deposits and banknotes on demand when holding only fractional reserves. The theoretical literature can be broadly divided into four strands: liquidity provision, asymmetric information, legal restrictions, and a medium of exchange. We assume that it is not zero cost to make a promise to redeem a liability at par value on demand. If so, then the conditions in the theories that result in par redemption are possible explanations of why banks promise to pay par on demand. If the explanation based on customers’ demand for liquidity is correct, payment of deposits at par will be promised when banks hold assets that are illiquid in the short run. If the asymmetric-information explanation based on the difficulty of valuing assets is correct, the marketability of banks’ assets determines whether banks promise to pay par. If the legal restrictions explanation of par redemption is correct, banks will not promise to pay par if they are not required to do so. If the transaction explanation is correct, banks will promise to pay par value only if the deposits are used in transactions. After the survey of the theoretical literature, we examine the history of banking in several countries in different eras: fourth-century Athens, medieval Italy, Japan, and free banking and money market mutual funds in the United States. We find that all of the theories can explain some of the observed banking arrangements, and none explain all of them