Foreign exchange and the liquidity trap

When short-term interest rates hover near zero, central banks may have difficulty offsetting downward momentum on prices and economic activity through traditional monetary-policy channels, since commercial banks have little incentive to make loans. Economists refer to this situation as a liquidity trap. Do exchange rate targets and foreign exchange operations, as some have suggested, offer a way to escape such a trap?Foreign exchange ; Liquidity (Economics) ; Economic conditions - Japan

New results on the impact of central-bank intervention on deviations from uncovered interest parity

Germany, Japan, and the United States continue to view foreign exchange intervention as an effective instrument, although the mechanism through which it operates is unclear. In this paper, we use official data on daily dollar intervention to examine its impact on exchange-rate risk premia through both the portfolio-balance and expectations channels. We define the risk premium in terms of deviation from uncovered interest parity and model its behavior using generalized autoregressive conditional heteroscedasticity. Our evidence of portfolio-balance and expectations effects is inconsistent across subperiods of different exchange-rate-policy regimes. Also, unlike Dominguez (1990) and Loopesko (1984), we find no evidence that coordination of intervention improves its efficacy.Foreign exchange - Law and legislation

Why intervention rarely works

Foreign-exchange-market intervention is generally ineffective when undertaken independent of monetary policy. But when undertaken as a goal of monetary policy, exchange-rate management can compromise price stability. This Economic Commentary explains the difficulties of implementing an intervention policy.Foreign exchange - Law and legislation ; Monetary policy

C-reactive protein as an outcome predictor for maintenance hemodialysis patients

C-reactive protein as an outcome predictor for maintenance hemodialysis patients.BackgroundThe possible association between inflammatory processes and other outcome measures in ESRD patients led us to measure the blood C-reactive protein (CRP) concentration in a large sample of hemodialysis patients, and to evaluate its statistical relationship with other common laboratory measures and patient survival. This was performed in a prospective, observational analysis with mortality as the principal outcome measure.MethodsOne thousand fifty-four routine blood samples, collected from as many patients during June and July 1995 (one sample per patient), were randomly selected for measurement of CRP, prealbumin, and other routine laboratory measures. Six months after the initial blood tests, patient survival was determined. Logistic regression analysis was the primary statistical tool used to evaluate laboratory associations with odds of death. Bivariate regression and correlation analyses were performed using all available data.ResultsThe distribution of CRP values was skewed; approximately 35% of the values exceeded the upper limit of the laboratory's reference range. Serum albumin and prealbumin concentrations both correlated with the serum creatinine concentration (r = 0.378 and r = 0.347, respectively; P's < 0.001), and were inversely associated with the CRP (r = -0.254 and r = -0.354, respectively; P's <0.001). CRP was also inversely associated with blood hemoglobin concentrations (r = -0.235; P < 0.001). Using multiple regression analysis to further explore these relationships, the serum creatinine concentration was inversely associated with CRP (r = -0.140; P < 0.001). However, after adjustment for the linkage of the serum creatinine with the serum albumin concentration (r = -0.378; P < 0.001), no relationship with creatinine was observed. Before and after adjustment for serum albumin and prealbumin concentration, the ferritin concentration correlated directly with CRP (r = 0.148; P < 0.001). Ferritin was inversely and highly correlated with total iron binding capacity (r = -0.516; P < 0.001). Independent associations of hemoglobin with albumin (t = 7.16; P < 0.001), prealbumin (t = 2.39; P = 0.017), and CRP (t = -4.27; P < 0.001) were observed. Also, the dose of erythropoietin was directly associated with the CRP concentration, before (r = 0.081, P = 0.009) and after (t = 2.03, P = 0.042) adjustment for the serum albumin and iron concentrations. CRP correlated directly with neutrophil (r = 0.318; P < 0.001) and platelet counts (r = 0.180; P < 0.001), but was weakly and inversely correlated with the lymphocyte count (r = -0.071; P = 0.04). A logistic regression analysis performed using the laboratory variables revealed a strong, independent, and inverse relationships between the serum albumin and creatinine concentrations, total lymphocyte count, and the odds risk of death. In this model, no significant relationship was observed between the odds risk of death and CRP.ConclusionsThe data presented herein suggest that: (1) strong predictable associations exist among laboratory proxies for malnutrition, anemia, and the acute phase reaction, and (2) the pathobiology implied by these laboratory abnormalities influence patients’ mortal risk primarily through depletion of vital body proteins, not inflammation

Option prices, exchange market intervention, and the higher moment expectations channel: a user’s guide

A vast literature on the effects of sterilized intervention by the monetary authorities in the foreign exchange markets concludes that intervention systematically moves the spot exchange rate only if it is publicly announced, coordinated across countries, and consistent with the underlying stance of fiscal and monetary policy. Over the past fifteen years, researchers have also attempted to determine if intervention has any effects on the dispersion and directionality of market views concerning the future exchange rate. These studies usually focus on the variance around the expected future exchange rate—the second moment. In this paper we demonstrate how to use over-the-counter option prices to recover the risk-neutral probability density function (PDF) for the future exchange rate. Using the yen/dollar exchange rate as an example, we calculate measures of dispersion and directionality, such as variance and skewness, from estimated PDFs to test whether intervention by the Japanese Ministry of Finance had any impact on the higher moments of the exchange rate. We find little or no systematic effect, consistent with the findings of the literature on the spot rate as Japanese intervention during the period 1996-2004 was not publicly announced, rarely coordinated across countries and, in hindsight, probably inconsistent with the underlying stance of monetary policy.Options (Finance) ; Foreign exchange administration

Intervention as information: a survey

Research has generally failed to find reliable connections between official exchange-market interventions and exchange rates that are consistent with either a monetary or a portfolio-balance theory of exchange-rate determination. Recently economists have suggested that intervention might sometimes influence exchange rates through its effects on agents’ expectations. This survey discusses newer research that analyzes informational aspects of intervention.Foreign exchange - Law and legislation

Intervention and the foreign exchange risk premium: an empirical investigation of daily effects

Currency markets have witnessed a sharp increase in government intervention since 1985. Many observers believe that this intervention promoted the dollar's depreciation between 1985 and early 1987, and that intervention has since helped to stabilize dollar exchange rates. This paper tests for a systematic effect of daily dollar intervention on exchange rate risk premia. We test for both portfolio balance effects and signaling influences by using daily data on central bank intervention (in dollars) against both the yen and the West German mark. Following work by Dominguez (1989) and Loopesko (1984), we measure the daily risk premium in terms of the deviation from uncovered interest parity. However, we follow other empirical analyses of exchange rates and allow for generalized conditional autoregressive heteroscedasticity (GARCH). Some evidence is found for both the portfolio balance and signaling channels.Foreign exchange - Law and legislation

Influence of microphone housing on the directional response of piezoelectric mems microphones inspired by Ormia ochracea

The influence of custom microphone housings on the acoustic directionality and frequency response of a multiband bio-inspired MEMS microphone is presented. The 3.2 mm by 1.7 mm piezoelectric MEMS microphone, fabricated by a cost-effective multi-user process, has four frequency bands of operation below 10 kHz, with a desired first-order directionality for all four bands. 7×7×2.5 mm3 3-D-printed bespoke housings with varying acoustic access to the backside of the microphone membrane are investigated through simulation and experiment with respect to their influence on the directionality and frequency response to sound stimulus. Results show a clear link between directionality and acoustic access to the back cavity of the microphone. Furthermore, there was a change in direction of the first-order directionality with reduced height in this back cavity acoustic access. The required configuration for creating an identical directionality for all four frequency bands is investigated along with the influence of reducing the symmetry of the acoustic back cavity access. This paper highlights the overall requirement of considering housing geometries and their influence on acoustic behavior for bio-inspired directional microphones