Moral hazard and bail-out in fiscal federations: evidence for the German Länder

We identify investor moral hazard in the German fiscal federation. Our identification strategy is based on a variable, which was used by the German Federal Constitutional Court as an indicator to determine eligibility of two German states (Länder) to a bail-out, the interest payments-to-revenue ratio. While risk premia measured in the German sub-national bond market react significantly to the relative debt level of a state (Land), we also find that a larger interest payments-to-revenue ratio counter-intuitively lowers risk premia significantly. Furthermore, with increasing values the risk premia decrease more strongly. This is evidence of investor moral hazard, because a larger indicator value increases the likelihood of receiving a bail-out payment. Quantitatively, the effects are, however, quite small. Our findings are robust to a variety of sample changes. In addition, we provide a case study of the recent Federal Constitutional Court ruling on the Land Berlin, which had filed for additional federal funds. The negative response of the court did not lead to a change in financial markets' bail-out expectations. In sum, our results indicate significant investor moral hazard in the sub-national German bond market. --moral hazard,bail-out,sovereign bond spreads,fiscal federalism,Germany

The macroeconomic effects of exogenous fiscal policy shocks in Germany: a disaggregated SVAR analysis

We investigate the short-term effects of fiscal policy shocks on the German economy following the SVAR approach by Blanchard and Perotti (2002). We find that direct government expenditure shocks increase output and private consumption on impact with low statistical significance, while they decrease private investment, though insignificantly. For the sub-category government investment – in contrast to government consumption – a positive output effect is found, which is statistically significant until 12 quarters ahead. Allowing for anticipation effects of fiscal policy does not change the sign of the positive consumption response. Anticipated expenditure shocks have significant effects on output when the shock is realized, but not in the period of anticipation. In sum, effects of expenditure shocks are only short-lived. Government net revenue shocks do not affect output with statistical significance. However, when splitting up this aggregate, direct taxes lower output significantly, while small indirect tax revenue shocks have little effects. Compensation of public employees is equally not effective in stimulating the economy. --Fiscal policy,government spending,net revenue,policy anticipation,structural vector autoregression

QCD as a Quantum Link Model

QCD is constructed as a lattice gauge theory in which the elements of the link matrices are represented by non-commuting operators acting in a Hilbert space. The resulting quantum link model for QCD is formulated with a fifth Euclidean dimension, whose extent resembles the inverse gauge coupling of the resulting four-dimensional theory after dimensional reduction. The inclusion of quarks is natural in Shamir's variant of Kaplan's fermion method, which does not require fine-tuning to approach the chiral limit. A rishon representation in terms of fermionic constituents of the gluons is derived and the quantum link Hamiltonian for QCD with a U(N) gauge symmetry is expressed in terms of glueball, meson and constituent quark operators. The new formulation of QCD is promising both from an analytic and from a computational point of view.Comment: 27 pages, including three figures. ordinary LaTeX; Submitted to Nucl. Phys.

Arterial Oxygen Saturation During Ascent to 5010 m: Heart Rate and AMS Scores

The hypothesis here is that tissues exposed to the hypoxia of altitude have increased blood flow so that the rate of arrival of oxygen is as rapid as normal. If the ascent is too rapid, the system starts to fail. The study involves an ascent to high altitude (5010 m) during which 59 subjects recorded their resting arterial oxygen saturation (SaO2), heart rate (HR) and Lake Louise acute mountain sickness (AMS) scores, twice daily. During the major ascent SaO2 fell progressively. In 42 subjects, HR increased in a highly significant, negative, relationship to SaO2. In 10 subjects heart rate (HR) remained unchanged. Three subjects showed extreme HR variability. Data were incomplete in four subjects. For nine of the subjects, showing the progressive HR versus SaO2 correlation during ascent, the sequence terminated with a lower HR than would be expected from the correlation so far. Individual AMS scores showed no correlation with SaO2 but averaged values from 19 of the subjects from each ‘one night’ stopover; showed a strong, negative, correlation. Average stopover HR values correlated negatively with the average SaO2 values. Cardiac output (CO) is likely to have increased during ascent as HR increased, since there is a progressive relationship between HR and cardiac output (CO). Hence, despite the progressive fall in SaO2, tissue oxygen delivery (DO2) would have remained close to normal in the 42 subjects who showed the significant HR: SaO2 relationship

The 2-dimensional non-linear sigma-model on a random latice

The O(n) non-linear $\sigma$-model is simulated on 2-dimensional regular and random lattices. We use two different levels of randomness in the construction of the random lattices and give a detailed explanation of the geometry of such lattices. In the simulations, we calculate the mass gap for $n=3, 4$ and 8, analysing the asymptotic scaling of the data and computing the ratio of Lambda parameters $\Lambda_{\rm random}/\Lambda_{\rm regular}$. These ratios are in agreement with previous semi-analytical calculations. We also numerically calculate the topological susceptibility by using the cooling method.Comment: REVTeX file, 23 pages. 13 postscript figures in a separate compressed tar fil

Structure of the axonal surface recognition molecule neurofascin and its relationship to a neural subgroup of the immunoglobulin superfamily

The chick axon-associated surface glycoprotein neurofascin is implicated in axonal growth and fasciculation as revealed by antibody perturbation experiments. Here we report the complete cDNA sequence of neurofascin. It is composed of four structural elements: At the NH2 terminus neurofascin contains six Ig-like motifs of the C2 subcategory followed by four fibronectin type III (FNIII)-related repeats. Between the FNIII-like repeats and the plasma membrane spanning region neurofascin contains a domain 75-amino acid residues-long rich in proline, alanine and threonine which might be the target of extensive O-linked glycosylation. A transmembrane segment is followed by a 113-amino acid residues-long cytoplasmic domain. Sequence comparisons indicate that neurofascin is most closely related to chick Nr-CAM and forms with L1 (Ng-CAM) and Nr-CAM a subgroup within the vertebrate Ig superfamily. Sequencing of several overlapping cDNA probes reveals interesting heterogeneities throughout the neurofascin polypeptide. Genomic Southern blots analyzed with neurofascin cDNA clones suggest that neurofascin is encoded by a single gene and its pre-mRNA might be therefore alternatively spliced. Northern blot analysis with domain specific probes showed that neurofascin mRNAs of about 8.5 kb are expressed throughout development in embryonic brain but not in liver. Isolation of neurofascin by immunoaffinity chromatography results in several molecular mass components. To analyze their origin the amino-terminal sequences of several neurofascin components were determined. The NH2-terminal sequences of the 185, 160, and 110-135 kD components are all the same as the NH2 termini predicted by the cDNA sequence, whereas the other neurofascin components start with a sequence found in a putative alternatively spliced segment between the Ig- and FNIII-like part indicating that they are derived by proteolytic cleavage. A combination of enzymatic and chemical deglycosylation procedures and the analysis of peanut lectin binding reveals O- and N-linked carbohydrates on neurofascin components which might generate additional heterogeneity

Spin-stiffness and topological defects in two-dimensional frustrated spin systems

Using a {\it collective} Monte Carlo algorithm we study the low-temperature and long-distance properties of two systems of two-dimensional classical tops. Both systems have the same spin-wave dynamics (low-temperature behavior) as a large class of Heisenberg frustrated spin systems. They are constructed so that to differ only by their topological properties. The spin-stiffnesses for the two systems of tops are calculated for different temperatures and different sizes of the sample. This allows to investigate the role of topological defects in frustrated spin systems. Comparisons with Renormalization Group results based on a Non Linear Sigma model approach and with the predictions of some simple phenomenological model taking into account the topological excitations are done.Comment: RevTex, 25 pages, 14 figures, Minor changes, final version. To appear in Phys.Rev.