Understanding the Dynamics of the US External Position

This paper studies the dynamics of the U.S. external position for the past 35 years, and examines alternative paths for future external adjustment. We develop a new present value expression for the external position that embeds the restrictions of international solvency and can be easily empirically evaluated with time series methods. Our empirical model accounts for almost all the variations in the U.S. external position between 1973 and 2008. We estimate that most of the quarter-by-quarter changes in the U.S. external position over this period are due to news about future returns and trade flows, but over long horizons the changes reflect prior expectations about how the U.S. would meet its international financial obligations. Importantly, we identify the expectations embedded in the current U.S. external position that contain relevant information about the future adjustment paths. These expectations indicate that the half-lives for future adjustment paths towards U.S. external balance are at least 13 years and involve a significant real depreciation of the dollar.Capital Flows, External Imbalances, International Debt, International Solvency

Financial Integration, Macroeconomic Volatility and Welfare

This paper studies the effects of financial integration on macroeconomic volatility and welfare. We examine a two-sector (tradable and nontradable), twocountry world economy with production in which both stocks and bonds are traded internationally, but markets are incomplete. The effects of integration are examined by comparing the equilibrium properties of the model under three financial configurations: autarky, low integration and high integration. The model predicts a non-monotonic relationship between the degree of financial integration and the volatility of several macroeconomic variables. Greater integration is initially associated with more volatile consumption and output, but as integration proceeds further volatility declines. We also find that while increased integration allows for significantly greater risk-sharing between countries, the improvement in welfare can be very small.Globalization; Incomplete Markets; Volatility; Welfare

Competition Policy in Small Distant Open Economies: Some Lessons from the Economics Literature

New Zealand is a small open economy that is remote from all major markets. The smallness and remoteness of New Zealand combine to imply that this country has, at least quantitatively, distinctive features for the regulation of economic activity by competition law. The isolation and small size of the economy mean that typically all but exporting firms are small as judged on a world scale, and that domestic markets are small and generally highly concentrated. This paper reviews the economic literature on the implications of an economy’s size and isolation for competition law. The literature suggests that principles underlying competition law do not change for small economies, but that the application of competition law should be different. In small economies, low regulatory and tax barriers to trade dominate the importance of competition law for good economic performance of domestic markets. In these economies, competition law should focus on economic benefit/detriment evaluations of mergers and trade practices rather than rules of thumb of the sort based on measures of market structure and indicators of competition, or those aimed at prohibiting particular practices per se. Producers’ surplus should not be de-emphasised in the calculation of benefits and detriments in small economies; particularly for activities that relate in any way to (potential) export activity. For any economy, particularly in the presence of competition, cooperation enhances economic performance in specific circumstances. In small economies cooperation can be particularly efficient-for example, in achieving scale and thereby export performance-although it may entail interaction among a large fraction of players in an industry. The approach that the literature suggests to the application of competition law in small economies places relatively heavy weight on dynamic efficiency as the criterion for competition law design and enforcement. It is squarely in accord with recommendations in the literature on desirable competition law for the so-called new economy.Small; Isolated; Economy; Antitrust; New Zealand; Producer Surplus: Consumer Surplus; Competition Law; Economic Benefit; Economic Detriment; Rule of Reason

Time-Varying Liquidity in Foreign Exchange

This paper addresses whether currency trades have greater price impact during periods of rapid public information flow. Central bankers often suggest that expectations are at times “ripe” for coordinated adjustment, and that periods of rapid information flow are such a time. We develop an optimizing model to account for the joint behavior of order flow and returns around announcements. Using transaction data made available by electronic trading, we estimate the price impact of trades in the DM/$ market precisely. We then test whether trades during periods with macroeconomic announcements have higher price impact. They do. We also test for dependence of liquidity on trading volume and return volatility (two other prominent state variables in the literature on liquidity variation). We do not find any evidence that liquidity depends on these variables. The findings provide policy-makers with guidance for the timing and magnitude intervention.

Informational Integration and FX Trading

This paper addresses international financial integration in a new way. We focus on informational integration, specifically, the importance of information conveyed by order flow in major currencies for pricing minor currencies. We develop a multi-currency model of portfolio allocation in the presence of dispersed information. We then test the modelÂ’s implications using four months of concurrent transaction data on nine currencies. The model explains 45 to 78 percent of daily returns in all nine currencies. Moreover, its prediction that order flow in individual markets should be relevant for determining prices in other markets is borne out.Exchange Rates, Order flow, Financial Integration

Regulation of endothelial cell activity and vascular inflammation by shear stress

This paper was presented at the 3rd Micro and Nano Flows Conference (MNF2011), which was held at the Makedonia Palace Hotel, Thessaloniki in Greece. The conference was organised by Brunel University and supported by the Italian Union of Thermofluiddynamics, Aristotle University of Thessaloniki, University of Thessaly, IPEM, the Process Intensification Network, the Institution of Mechanical Engineers, the Heat Transfer Society, HEXAG - the Heat Exchange Action Group, and the Energy Institute.Atherosclerosis, a chronic inflammatory disease of arteries, develops predominantly at branches, bends, and bifurcations in the arterial tree that are exposed to low or disturbed blood flow. The endothelium is in direct contact with flowing blood and hence is exposed to shear stress, a mechanical force that varies with time, magnitude, and direction, according to vascular pulsatility and anatomy. Bends and bifurcations of arteries that are susceptible to lesion formation are exposed to low/oscillatory shear stress, a mechanical environment that influences vascular physiology by enhancing inflammatory activation and promoting endothelial cell (EC) apoptosis. In contrast, relatively straight, unbranched regions of the arterial tree that are exposed to high shear stress are protected from inflammation, EC death and lesion development. Thus low shear stress may predispose arteries for lesion formation whereas high shear stress may prevent atherosclerosis by enhancing endothelial protection. In this paper, I will summarize some of the molecular mechanisms behind the spatial localization of vascular inflammation and atherosclerosis, emphasizing studies by my research group of two key proinflammatory signaling pathways, the mitogen-activated protein kinase (MAPK) pathway and the nuclear factor-kappa-B (NF-κB) pathway.This study is funded by the British Heart Foundation

Where Are We Now? Real-time Estimates of the Macro Economy

This paper describes a method for calculating daily real-time estimates of the current state of the U.S. economy. The estimates are computed from data on scheduled U.S. macroeconomic announcements using an econometric model that allows for variable reporting lags, temporal aggregation, and other complications in the data. The model can be applied to find real-time estimates of GDP, inflation, unemployment or any other macroeconomic variable of interest. In this paper I focus on the problem of estimating the current level of and growth rate in GDP. I construct daily real-time estimates of GDP that incorporate public information known on the day in question. The real-time estimates produced by the model are uniquely-suited to studying how perceived developments the macro economy are linked to asset prices over a wide range of frequencies. The estimates also provide, for the first time, daily time series that can be used in practical policy decisions.Keywords: Real-time data, Kalman Filtering, Forecasting GDP

Evans Medicine

Newsletter of the Evans Memorial Department of Clinical Research and Preventive Medicine at University Hospital

Evans Medicine

Newsletter of the Evans Memorial Department of Clinical Research and Preventive Medicine at University Hospital

Evans Medicine

Newsletter of the Evans Memorial Department of Clinical Research and Preventive Medicine at University Hospital