Emerging Local Currency Bond Markets

We assess the development of local currency bond markets in emerging market economies (EMEs). Supported by policies and laws that helped to improve macroeconomic stability and creditor rights, many local currency EME bond markets have grown substantially over the past decade and have also provided USD-based investors with attractive returns. U.S. investors have responded by increasing their holdings of EME local currency bonds from less than $2 billion in 2001 to over$27 billion by end-2008. While the increase in U.S. investment spanned many EMEs, empirical tests suggest that relatively more went to those with identifiable investor-friendly institutions and policies.

Local Currency Bond Markets

We analyze the development of 49 local bond markets. Our main finding is that policies and laws matter: Countries with stable inflation rates and strong creditor rights have more developed local bond markets and rely less on foreign-currency-denominated bonds. The results suggest that "original sin" is a misnomer. Emerging economies are not inherently dependent upon foreign-currency debt. Rather, by improving policy performance and strengthening institutions they may develop local currency bond markets, reduce their currency mismatch, and lessen the likelihood of future crises.

External Capital Structures and Oil Price Volatility

This paper assesses the extent to which a country’s external capital structure can aid in mitigating the macroeconomic impact of oil price shocks. Two Caribbean economies highly vulnerable to oil price shocks are considered: an oil importer (Jamaica) and an oil exporter (Trinidad and Tobago). From a risk-sharing perspective, a desirable external capital structure is one that, through international capital gains and losses, helps offset responses of the current account balance to external shocks. It is found that both countries could alter their international portfolio to provide a better buffer against such shocks.Hedging, Oil, Foreign assets and liabilities, International portfolios

Local Currency Bond Markets

This paper analyzes the development of 49 local bond markets. The main finding is that policies and laws matter: countries with stable inflation rates and strong creditor rights have more developed local bond markets and rely less on foreigncurrency-denominated bonds. The results suggest that "original sin" is a misnomer. Emerging economies are not inherently dependent on foreign currency debt. Rather, by improving policy performance and strengthening institutions, they may develop local currency bond markets, reduce their currency mismatch, and lessen the likelihood of future crises. Copyright 2006, International Monetary Fund

Sudden Flight and True Sudden Stops

We extend the sudden stops literature by allowing crisis episodes to be caused by either the retreat of global investors, as is assumed but not shown in the extant literature, or the sudden flight of local investors. We find that almost half of the previously defined sudden stops are actually episodes of sudden flight. Compared to sudden flight, true sudden stops are bunched and are associated with greater slowdowns in economic activity and sharper currency depreciations. We show that the empirical regularities of sudden flight and true sudden stops are consistent with theoretical models that incorporate gross capital flows and information asymmetries.international capital flows, capital flight, emerging market crises

Foreign Participation in Local Currency Bond Markets

Countries that cannot attract foreigners to invest in their local currency bonds run the risk of currency mismatches that can result in painful crises. We analyze foreign participation in the bond markets of over 40 countries. Bond markets in less developed countries have returns characterized by high variance and negative skewness, factors that we show are eschewed by U.S. investors. While results based on a three-moment CAPM indicate that it is diversifiable idiosyncratic risk that U.S. investors shun, our analysis suggests that countries can improve foreign participation by reducing macroeconomic instability.

Ingredients for a well-functioning capital market

노트 : A publication of the Korea Economic Institute and the Korea Institute for International Economic Polic

Trade-offs between personal immunity and reproduction in the burying beetle, N. vespilloides

We know that parental investment and immune investment are costly processes, but it is unclear which trait will be prioritised when both may be required. Here we address this question using the burying beetle Nicrophorus vespilloides, carrion breeders that exhibit biparental care of young. Our results show that immunosuppression occurs during provision of parental care. We measured Phenoloxidase (PO) on Day 1-8 of the breeding bout and results show a clear decrease in PO immediately from presentation of the breeding resource onwards. Having established baseline immune investment during breeding we then manipulated immune investment at different times by applying a wounding challenge. Beetles were wounded prior to and during the parental care period and reproductive investment quantified. Different effects on reproductive output occur depending on the timing of wounding. Challenging the immune system with wounding prior to breeding does not affect reproductive output and subsequent Lifetime Reproductive Success (LRS). LRS is also unaffected by applying an immune elicitor prior to breeding, though different arms of the immune system are up/downregulated, perhaps indicating a trade-off between cellular and humoral immunity. In contrast, wounding during breeding reduces reproductive output and to the greatest extent if the challenge is applied early in the breeding bout. Despite being immunosuppressed, breeding beetles can still respond to wounding by increasing PO, albeit not to pre-breeding levels. This upregulation of PO during breeding may affect parental investment, resulting in a reduction in reproductive output. The potential role of juvenile hormone in controlling this trade-off is discussed

External Capital Structures and Oil Price Volatility

We assess the extent to which a country’s external capital structure can aid in mitigating the macroeconomic impact of oil price shocks. We study two Caribbean economies highly vulnerable to oil price shocks, an oil-importer (Jamaica) and an oil-exporter (Trinidad and Tobago). From a risk-sharing perspective, a desirable external capital structure is one that, through international capital gains and losses, helps offset responses of the current account balance to external shocks. We find that both countries could alter their international portfolio to provide a more effective buffer against such shocks.

Finite Density QCD in the Chiral Limit

We present the first results of an exact simulation of full QCD at finite density in the chiral limit. We have used a MFA (Microcanonical Fermionic Average) inspired approach for the reconstruction of the Grand Canonical Partition Function of the theory; using the fugacity expansion of the fermionic determinant we are able to move continuously in the ($\beta -\mu$) plane with $m=0$.Comment: 3 pages, LaTeX, 3 figures, uses espcrc2.sty, psfig. Talk presented by A. Galante at Lattice 97. Correction of some reference